REG-Menhaden Resource Efficiency PLC: Proposed managed realisation and return of capital

Menhaden Resource EfficiencyAnnouncement

20/12/2024 11:45

20 December 2024

 

Menhaden Resource Efficiency plc (`MHN' or the `Company')

 

Proposed managed realisation and return of capital

 

 

Following the announcement on 16 September 2024 that the Company is reviewing
its future options, the Board has decided that it is in the best interests of
shareholders as a whole to propose an orderly realisation of the Company and
return the realised capital to shareholders.  This decision has been taken in
consultation with Menhaden Capital Management (the portfolio manager) and the
AIFM (Frostrow Capital) and reflects feedback from a range of shareholders.
The Company intends to publish a circular in early 2025 in order to put the
necessary resolutions to shareholders.

 

Rationale

 

While the Board believes that the Company's resource efficiency investment
thesis remains compelling, headwinds continue to weigh more widely on appetite
for investment trust shares, particularly those with smaller scale and lower
liquidity, resulting in wide discounts and the inability to issue new shares
and grow trusts.

 

This has also been the case for Menhaden Resource Efficiency plc. Although the
NAV has grown by 7.1% per annum since inception, and by 9.7% per annum over
the period since the appointment of Luciano Suana as Chief Investment Officer
in March 2016, the share price growth has continually lagged NAV growth
(reaching a discount of 38.9% on the day prior to the 16 September
announcement), resulting in the Company not achieving sufficient scale (market
cap £94.2mn as at 30th November) and the shares suffering poor liquidity.

 

The Board has, with its advisers Deutsche Numis, obtained and considered
shareholder feedback and undertaken a comprehensive analysis of a wide range
of possible future options. The Company received multiple proposals from third
parties which included alternative investment management arrangements,
potential mergers with other investment trusts, and discounted cash offers for
the unquoted portfolio.

 

However, the shareholder feedback received by the Board heavily supported a
realisation of the portfolio and return of capital to shareholders. As such,
and after taking account of the deliverability and immediacy of the options,
the Board has decided to propose to shareholders that MHN is put into an
orderly realisation process.

 

A circular, expected to be published early in 2025, will include detail on the
proposal, including measures intended to effect the realisation on a cost- and
tax-efficient basis. Shareholders do not need to take any action at this time.

 

Howard Pearce, Chair of Menhaden Resource Efficiency plc said:

"With its portfolio of investments in both listed companies and unquoted
co-investments, Menhaden Resource Efficiency has delivered good NAV returns.
The Board recognises and appreciates the efforts of the Menhaden Capital
Management team in delivering this performance." 

 

"However, the conditions for UK investment companies have changed
significantly over the past decade. Having considered a range of future
options, proposals and shareholder feedback, the Board now believes it is in
all shareholders' best interests to propose an orderly realisation and return
of capital. Given the nature of the portfolio, the Board believes this can be
achieved in a relatively short timeframe once the necessary shareholder
approvals have been obtained."

 

Ben Goldsmith, CEO of the portfolio manager, Menhaden Capital Management,
added:

"We are proud of the portfolio's NAV performance since launch. When I
conceived Menhaden Resource Efficiency together with our chairman Graham
Thomas, our thesis was that companies with the most efficient energy and
resource use would outpace competitors, particularly as supply-demand dynamics
continued to constrain net supply.

 

"Since then, drivers including the global race to net zero, pandemic
constraints, plus the Ukraine and other wars, have highlighted the importance
of energy security and critical resources for many companies. Businesses who
have navigated such constraints and are adapting to the energy transition have
typically outperformed. Our investment thesis remains intact, and the
opportunities to allocate capital to resource-efficient businesses remain.

 

"However, considering the wider ongoing challenges for investment companies,
we think the time is now right to deliver back to shareholders the return on
capital they have accrued, as well as their original capital.  As investment
in global resource efficiency has become more mainstream, attention now needs
to turn to rebuilding natural ecosystems."

 

ENDS

 

Contacts:

 

 Menhaden Resource Efficiency plc                                              
 Howard Pearce, Chairman            Via KL Communications or Deutsche Numis    
                                                                               
 Deutsche Numis - Corporate Broker                                             
 Nathan Brown Matt Goss             +44 (0)20 7260 1000                        
                                                                               
 KL Communications - Financial PR   Menhaden@kl-communications.com             
 Charles Gorman Henry Taylor        +44 (0)20 3882 6644 / +44 (0)7795 977 967  
 Frostrow Capital - AIFM                                                       
 Paul Griggs (Company Secretary)    +44 (0)20 3709 8733                        

 

About Menhaden Resource Efficiency plc

 

Menhaden Resource Efficiency plc (ticker: MHN) is an investment trust, listed
on the main market of the London Stock Exchange, which invests in businesses
and opportunities demonstrably delivering or benefitting significantly from
the efficient use of energy and resources; irrespective of their size,
location or stage of development.  Its portfolio consists primarily of direct
listed and unlisted holdings across different asset classes and geographies.

 

It has net assets of £134.4mn as at 30 November 2024 1  (#_ftn1). MHN's
portfolio manager is Menhaden Capital Management (MCM).

 

MHN's historic performance is as follows - as at the date of the most recent
factsheet.

 

Performance as at 30 November 2024 (%)

 

 Percentage Growth  YTD    1 Year  3 Years  5 Years    Since Inception  
 NAV                6.9%   9.7%    11.7%    48.5%      78.1%            
 Share Price        19.6%  24.9%   7.8%     34.6%      19.9%            
 Index ^            5.7%   6.6%    36.9%    56.2%      97.7%            

 

Past performance is not a guide to future performance. The value of
investments and the income from them may fall as well as rise and is not
guaranteed. An investor may receive back less than the original amount
invested.

 

Source: Morningstar/Frostrow. ^ RPI+3%, and the data is quoted on a month lag.

 

 

About the portfolio manager, Menhaden Capital Management (MCM)

 

MCM was co-founded in 2015 by Ben Goldsmith, MCM's chief executive officer,
and Graham Thomas, non-executive chairman of MCM's investment committee.
Together with Luciano Suana, Chief Investment Officer, who joined MCM in 2016
to enhance MCM's structure, processes and performance, they form MCM's
investment committee. MCM will consider alternative structures in the future
to continue to invest in the resource efficiency theme, and build on the
strong track record they have established.

 

 1  (#_ftnref1) Latest factsheet.



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