Responding to allegations reported by InvestorDaily last week that a Melbourne-based organisation of financial planners, Investor Action Group (IAG), has sought to obstruct a proposal to merge three funds under the directorship of Rural Funds Management, an IAG spokesperson said its interest in the matter is motivated purely by concern for its clients.
IAG member firms, including Melbourne boutique Segue Financial Services and the Banks Group, an authorised representative of Westpac-aligned licensee Magnitude, represent clients who hold various stakes in three funds to which RFM has been appointed responsible entity – the Chicken Income Fund, Australian Wine Fund and RiverBank Fund.
IAG spokesperson deLancey Worthington, a portfolio manager at Segue Financial Services, told InvestorDaily RFM’s proposal to merge and list the three funds is not in the best interests of Segue’s clients.
“[IAG] are the only ones standing up to this and saying it is wrong,” Mr Worthington said. “[The proposal] is being painted as a merger but really it is a takeover.”
Mr Worthington said IAG is concerned that the proposal “contravenes ASIC guidance” by failing to ensure that the “protection of existing unit holders” is upheld, with specific concerns over the possibility of transaction costs being fronted by unit holders under the deal, and a perceived lack of compliance with the “arm’s length” principle.
The portfolio manager also officially responded to allegations made by RFM that IAG is supporting the appointment of a replacement responsible entity “associated” with former Trio Capital director David Millhouse.
“Segue Financial Services has no association, no vested interest whatsoever,” Mr Worthington said.
The proposal to remove RFM as responsible entity and replace it with the Huntley Group – an entity RFM contends is associated with Mr Millhouse – was instigated by a third party, a rival agricultural fund manager, and had nothing to do with the IAG.
“There are even Segue clients not taking up the ProTen offer,” Mr Worthington said.
A company called Sunset Amber Pty Ltd – an investor in the RiverBank fund, which RFM claims is “associated with the principal of Segue Financial Services” in a statement on its website – filed for an injunction in the Supreme Court of Victoria last Monday to prevent RFM from holding a scheduled meeting.
The matter is due to be heard in the Supreme Court of Victoria in early December.
