Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Private equity firm hits back at Brooks Macdonald in legal dispute

Private equity firm hits back at Brooks Macdonald in legal dispute

Origo Partners, a private equity firm focused on China, has turned to the courts to try to prevent Brooks Macdonald opening a new line of attack in a dispute between the two companies.

The row relates to a 2011 purchase by Spearpoint, which Brooks Macdonald acquired the following year, of convertible zero dividend preference shares issued by Origo. Brooks Macdonald now owns approximately £30 million worth of Origo preference shares.

Brooks Macdonald alleges the terms governing the preference shares do not reflect what was agreed in the placing letter ahead of the transaction. Origo denies this.

While Brooks Macdonald has not yet begun legal proceedings against Origo, it has not withdrawn its threat to take such action.

According to Origo, Brooks Macdonald is now exploring a second complaint against it through lawyers in the Isle of Man.

Origo said Brooks Macdonald is contesting the validity of a resolution creating the preference shares, on the grounds this had to be approved by 75% of all shareholders, rather than 75% of votes actually cast.

Origo noted Brooks Macdonald has not initiated formal legal proceedings on this front but had ‘refused the company’s direct request to withdraw’ the complaint. ‘In these circumstances, the company [Origo] proposes to act promptly to remove any possible doubt that its articles operate on any basis other than that on which the company and its shareholders have proceeded to date,’ Origo said.

To fight the latest complaint, Origo has now applied ‘on an expedited basis’ through the Isle of Man’s courts for a declaration affirming that the resolution was properly ratified.

Separately, Brooks Macdonald has sharply criticised Origo, citing ‘significant concerns regarding the corporate governance, performance, investment strategy and prospects’ of the private equity firm.

Brooks has proposed overhauling Origo’s board and committing its portfolio to ‘orderly realisation’. It said it was ‘disappointed’ Origo had ‘not engaged proactively’ on any of these matters. ‘In the circumstances, Brooks Macdonald reserves all of its rights and confirms that it will rigorously protect its clients’ interests,’ the company said in a statement.

Origo responded that it ‘remains committed to attempting to work with Brooks Macdonald to achieve a mutually acceptable resolution to both the first complaint and the second complaint’.

Origo’s £92 million portfolio is concentrated in the resources and cleantech sectors. In August 2013, the firm announced it would make no new investments but focus on realisations at ‘the right time and right value for shareholders’. Its share price has plunged by 83% over the past three years.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Sector spotlight: how Harwood's Philbin is playing emerging markets

Sector spotlight: how Harwood's Philbin is playing emerging markets

Emerging markets have been a rollercoaster for investors, but amid the doom there have been have been bright spots, such as India. 

Play JP Morgan AM's Conte: why France is my biggest overweight

JP Morgan AM's Conte: why France is my biggest overweight

The European Smaller Companies trust fund manager is also finding opportunities within the European IPO market.

Brewin's Foster: running out of value with Sandy Nairn

Brewin's Foster: running out of value with Sandy Nairn

In this week's podcast, Guy Foster and Dr Sandy Nairn discuss caution towards the stretched valuations most stock markets today currently offer.

Your Business: Cover Star Club

Profile: CHI's bond supremo on liquidity and bond risk management

Profile: CHI's bond supremo on liquidity and bond risk management

'Some people have been extremely complacent about rate rise risk. Myself, I wish they would just get on with it.'

Wealth Manager on Twitter