Unlocking Value

On 18 October 2024, China Merchants China Direct Investments (CMCDI, 133 HK) announced that it entered into a new investment management agreement (IMA) with the incumbent manager.

We, Argyle Street Management (ASM), find the new IMA unacceptable.

What the new IMA says

Under the new IMA (which will last three years), the management fees will be slightly reduced by 25 basis points. That means:

• For non-listed assets, the fees are reduced from 2.0% to 1.75% p.a.
• For listed assets, the fees are reduced from 1.5-2.0% to 1.25-1.75% p.a. (depending the type of listed shares)
• Performance fee stays the same at 8%

And that’s it.

The new IMA does not address the large discount to NAV

The new IMA is silent on the large discount to net asset value, the primary issue of CMCDI. No asset disposal, no buy backs, and no discount management program.

CMCDI’s claims that the new IMA “offers competitiveness“. It does not.

Despite the small fee reduction, the manager still charges much higher fees than other reputable China-focused closed-end funds (even on the listed shares alone)

And yet CMCDI trades at far larger discount. See our comparison here.

What happens next?

The new IMA is subject to independent shareholder approval at another EGM.

That means the affiliates of China Merchants Group (who own 27.59% shares in CMCDI) and Victor Chu (1.99%) are not allowed to vote.

CMCDI says that it will publish a meeting notice “on or before 8 November“. The meeting itself will take place in November or December (exact date is not confirmed yet).

We will keep you posted.

If you are new to CMCDI, read our primer.

Chat with us on WeChat or WhatsApp:

💬 WeChat ID: ASM_Argyle

💬 WhatsApp ID: +852 6317 6371

🖥️ UnlockValueChinaMerchants.com

📧 ChinaMerchants@asmhk.com

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2024年10月18日，招商局中国基金（“招商基金”，133 HK）宣布已与现任投资经理签订了一份新的投资管理协议。

我们Argyle Street Management（ASM）认为新的投资管理协议是不可接受的。

新的投资管理协议的核心条款

基于新的投资管理协议（为期三年），管理费仅略有降低25个基点（即0.25%）。

• 对于非上市资产，费用从每年2.0%降至1.75%。
• 对于上市资产，费用从每年1.5-2.0%降至1.25-1.75%（取决于上市股份的类型）。
• 表现费保持不变，为8%。

仅此而已。

新的投资管理协议没有解决股价较净资产大幅折让的问题

新的投资管理协议完全没有提及如何解决股价相较于净资产大幅折让的问题，而这是招商基金最主要问题。

本次完全未提及如何进行资产处置、未提及股票回购计划，也没有折扣管理计划。

招商基金声称新的投资管理协议“提供竞争力”。实际情况并非如此。

尽管本次管理费略微降低，但是招商基金投资经理收取的费用仍远远高于其他知名的封闭式基金，然而交易折价更大。具体可以参阅我们的比较。

下一步是什么？

此次投资管理协议需要在特别股东大会上取得独立股东的批准方生效。

这意味着招商局集团（持有27.59%）和诸立力先生（持有1.99%）被视为“关联人”，他们不能投票。

招商基金表示将在“11月8日或之前”发布详情及通函等。特别股东大会的召开预计将在11月或12月举行（确切日期尚未确认）。

我们将保持更新。

如果您刚开始了解中国基金，请阅读我们的指南。

欢迎随时与我们联系：

💬 微信: ASM_Argyle

💬 WhatsApp: +852 6317 6371

🖥️ UnlockValueChinaMerchants.com

📧 ChinaMerchants@asmhk.com