WAM Capital (WAM) has redeemed $85 million of investments from a range of funds following its merger with Premium Investors on 31 December.
"WAM Capital's board made the decision to redeem. This was based on what the board believed would deliver the best risk-adjusted returns to WAM Capital shareholders," WAM chairman Geoff Wilson told Investor Weekly.
"WAM Capital's investment manager has delivered exceptional performance numbers over the last 14 years. WAM will continue to have its money managed as it always has by Wilson Asset Management who focuses on buying into undervalued growth companies," he said.
WAM has strategic share holdings in a number of other Listed Investment Companies (LICs): Emerging Leaders Investment (15 per cent), Century Australia Investments (10.5 per cent) and Ironbark Capital (6 per cent).
Consistent with the transition arrangements agreed as part of the merger, WAM Capital has terminated its investment management arrangement with Treasury Group.
"Since the implementation date and following a comprehensive review, the board has redeemed all the underlying listed unit trusts in Premium Investors. The proceeds will be managed in line with WAM's proven investment process," Mr Wilson said.
The merger, which also saw WAM assets grow by $296 million and shareholders increase to 7,800, was agreed to by both boards in September last year.
"The merger makes WAM Capital more relevant in the market and a substantial listed company," Mr Wilson said.
"[It] was consistent with our strategy to take select opportunities to grow the company for the benefit of WAM Capital shareholders."
WAM Capital shareholders are also expected to benefit from reduced fixed administration expense ratios, increase in share liquidity and greater market relevance and coverage.
Under the terms of September's merger agreement, WAM Capital acquired 100 per cent of Premium Investors' shares on a net tangible assets (NTA) to NTA basis.
WAM offered Premium shareholders the option to exchange Premium shares for WAM Capital shares, elect to receive cash for their Premium shares or a combination of both.
"The independent directors believe the scheme is in the best interests of Premium shareholders and intend to vote their own Premium shares in favour of the proposal," the firm said.
Mr Wilson said that the firm continues to be interested in acquisitions if it adds value to its shareholders.
