UK pension funds retain stakes in environmental investor Ludgate amid buyout

South Yorkshire and Clwyd schemes stand put in private equity deal

The UK’s South Yorkshire Pensions Authority and Clwyd Pension Fund are among those who will retain their stake in the troubled resource efficiency investor Ludgate Environmental Fund, while Henderson plans sell its shares to Headway Investment Partners as part of a buyout by the private equity firm.

The £11m (€12.7m) London-based fund is due to wind-up next year and reported “disappointing” progress in its 2016 financial report, with some assets being sold off for less than net asset value while others saw a decline in profitability. Revenues fell more than 60% year-on-year, with a net loss of nearly £18m recorded on June 30, compared with just over £3m the previous year.

Ludgate invests in ‘environmental’ themes, such as recyclable packaging, waste-to-energy and carbon trading.

A fund managed by Headway – a Scottish company specialising in buy-outs – has made an offer to buy Ludgate for 16 pence per share, valuing Ludgate at £8.5m. The offer was formally made last month, and represented a discount of around 8.6% to the firm’s closing price at the time, and a discount of more than 22% to Ludgate’s most recently published net asset value (NAV) per ordinary share (from September 2016). It will delist the company from the Alternative Investment Market of the London Stock Exchange should the offer be accepted.

Henderson Alternative Strategies Trust has 2.2m shares in the fund through its trustee, State Street Nominees. It has agreed to sell those shares to Headway at the proposed price.

The Clwyd Pension Fund in North Wales owns 10.86%, with investment of £6m between 2006 and 2010.At the time of buying the shares, it was advised by Y-C-S Ltd. It says it doesn’t plan to accept the offer from Headway, and will retain its stake in the fund if Headway becomes the new controlling shareholder. So will South Yorkshire Pension Authority, which doesn’t use external advisors, and owns 3.7m shares – around 6% – for which they paid £3.8m. According to a spokesperson, that investment is now worth £500,000.

Headway needs to secure more than 50% of the shares to be able to take control of Ludgate Environmental Fund. In December, it had received commitments to accept the offer from shareholders representing 34.89%. Ludgate did not respond to multiple requests for comment regarding whether this figure had grown since December.

Another investor in Ludgate Environmental Fund is GML Ltd – a Russian financial holding company whose Director, Tim Osborne, is also a senior partner at Wiggin Osborne Fullerlove, an English law firm specialising in “international tax issues”. According to the firm, Osborne “is primarily concerned with pursuing compensation for GML Ltd. for the discriminatory expropriation of Yukos Oil Company and that company’s assets by the Government of the Russian Federation”.

Royal London Asset Management is also an investor, as is Ocean Capital Holdings, a Dutch investment company with “a successful track record of investing, managing and exiting private investments in the areas of oil & gas, conventional & renewable energy, resource efficiency, real estate and life sciences”, according to Ludgate. Ocean Capital Holdings owns 5.8m shares in Ludgate Environmental Fund and its Director is Gijs Voskamp, the CEO of Ludgate.