Listed fund management firm Clime Investment Management is planning to distribute its holdings in Headline Group to its shareholders.

The 11.4 million shares in Headline Group are worth $4.2 million and will give Clime shareholders about 7 to 8 cents per share.

"The decision to distribute the holding to our shareholders is part of Clime's business plan to move from an investment management company to a fund manager," Clime executive director John Abernethy said.

"The board intends to reduce the capital as we become more profitable. Headline is not adding anything to our profitability, because it is a long-term asset and doesn't go through our balance sheet and it is not paying dividends currently," he said.

"By returning that to our shareholders we are reducing capital, which is consistent with our strategy. It will lift our return on equity."

Clime is currently receiving tax and legal advice on the distribution of the shares and expects to make a final decision within the next three months.

Abernethy said the investment in Headline Group was made 14 years ago, when the company operated solely as an investment company under the name Loftus Capital Partners.

"Shareholders can do with it what they want. We think it is a great long-term investment and we hold it in our funds," he said.
 
If the distribution goes ahead, Clime will have just one holding left. It owns 23 per cent of Jasco, a distributor of office supply and fine art products.

Abernethy said there were no plans as of yet to sell its holding in Jasco as well.

"Jasco is unlisted and that makes it less easy to sell," Abernethy said.

Besides, the company has been returning capital to its investors in the form of a special dividend, which lessens the need to offload the holding, he said.

"I think they have returned $1 million to us over the last 15 months," he said.

"It is a highly profitable company, so we are pretty happy with that one," Abernethy said.