LONDON - Menhaden Resource Efficiency plc (LSE:MHN), an investment trust focused on energy and resource efficiency, has announced a managed realisation process to liquidate its holdings and return capital to shareholders. This decision follows a review of the company’s future options and extensive consultations with shareholders and advisors.
The board’s decision, made in conjunction with the portfolio manager Menhaden Capital Management and the AIFM Frostrow Capital, comes after considering the persistent challenges faced by investment trusts, particularly those that are smaller in scale and suffer from lower liquidity. Despite a robust annual NAV growth since inception, Menhaden’s share price has not kept pace, culminating in a 38.9% discount to NAV as of the day before the company’s announcement on September 16, 2024.
Menhaden has a market capitalization of approximately £94.2 million as of November 30, 2024, and has struggled with achieving sufficient scale and share liquidity. The forthcoming circular, expected to be published in early 2025, will detail the proposed realisation and return of capital, which aims to be cost- and tax-efficient for shareholders.
Howard Pearce, Chairman of Menhaden, expressed appreciation for the portfolio manager’s performance but acknowledged the changing conditions for UK investment companies over the past decade. Ben Goldsmith, CEO of Menhaden Capital Management, reflected on the success of their investment thesis but noted the need to adapt to the mainstreaming of global resource efficiency investment and the focus on rebuilding natural ecosystems.
The company’s portfolio, which includes both listed companies and unquoted co-investments, has delivered strong NAV returns, with an increase of 7.1% per annum since inception and 9.7% per annum since Luciano Suana’s appointment as Chief Investment Officer in March 2016. However, the share price has not reflected this growth, indicating a disconnect between NAV performance and market valuation.
The board’s proposal for an orderly realisation is based on feedback from shareholders and a comprehensive analysis of various options, including alternative investment management arrangements, potential mergers, and discounted cash offers for the unquoted portfolio.
The announcement is based on a press release statement from Menhaden Resource Efficiency plc, and shareholders are advised that no immediate action is required on their part. Further details will be provided in the forthcoming circular to shareholders.
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