

The £8.6bn (€10.7bn) West Midlands Pension Fund has voted not to approve the 2011 financial statements for a beleaguered water investment fund in which it holds an almost 30% stake.
In rejecting the accounts for London-listed, Guernsey-domiciled Aqua Resources Fund Ltd., the scheme said it had followed the advice of governance consultant PIRC.
It comes as the fund may have to exit the London Stock Exchange following a breach of the exchange’s listing rules (RI coverage).
As West Midlands was not alone in its opposition, the resolution to adopt the financial statements for 2011 was not approved at Aqua’s annual meeting last Friday. Aqua said the statements were still valid despite the shareholders’ rejection.
Aqua Resources chairman Hasan Askari described the move as a protest vote. “I think it had nothing to do with the financial statements themselves. They are valid and were audited with unqualified opinion,” he told Responsible Investor.
“It had to with the shareholders’ dissatisfaction with the performance of the fund compared with its original objectives, the performance of the share price and the fees paid to the investment managers.”Aqua was launched in 2008 as a closed fund investing in water companies worldwide. In a presentation dated 30 June 2011, the fund reported €74.7m in assets – run by Cayman Islands-exempted FourWinds Capital Management.
Aqua’s investment in China Hydroelectric Corp (CHC) has proven problematic, losing 84% of its value in 2011, both because of a drought in China and because of investor concerns about an investigation by the US Justice Department into possible accounting fraud by Chinese companies listed on the New York Stock Exchange. Aqua said that as far as it knew, CHC was not a target.
At the end of April, it emerged that Aqua was no longer compliant with the 25% free float rule for companies listed on the London Stock Exchange – due to the addition of a new investor. Aqua has called for a special meeting in August where it will ask shareholders to approve a de-listing from the exchange.
Meanwhile, former West Midlands Chief Investment Officer Judy Saunders has been appointed as a consultant to listed hedge fund firm Man Group plc following her retirement from the fund.