LMS Capital PLC (LMS.LN) announced a change in strategy and said it would make no new investments and focus instead on selling off its portfolio, effectively caving in to an influential group of investors who wanted a swift break-up of the company.LMS faced down their Chairman led investor revolt.
Shareholders representing 35% of the mid-market private-equity firm and led by Chairman Robert Rayne had objected to the company's revised strategy to sell existing quoted, direct and fund investments and focus exclusively on direct investments.
The group, self-styled as the Concert Party, had wanted the company to sell assets and return cash to shareholders--a strategy it said was of greater value than investing in illiquid assets at a time when the company's share price was already trading at a 38% discount to net asset value.
Monday, LMS Capital said it had tried to initiate a sale of the group's holding, but it had been impossible to establish an appropriate price that would be acceptable to the sellers and that buyers would be prepared to pay in current market conditions.
This story has implications for The Carlyle Group's IPO. LMS Capital is already publicly traded, something Carlyle aspires to be. With existing shareholders unhappy, LMS will execute a wind down. How might that impact investor appetite for Carlyle's PEU shares?
