Investor activism on display, Hirco defers Jan 16 EGM

Bowing to mounting pressure from shareholders against its merger proposal, Hirco, the London-listed investment vehicle of the Hiranandani group has deferred its extra-ordinary general meeting (EGM), scheduled to be held on January 16, until further notice.

The EGM was called to discuss the proposed merger of two other companies of the Hiranandani group — Hirco Developments and Hiranandani Investment Companies — with Hirco. However, shareholders, including hedge fund Laxey Partners, had opposed the merger, claiming that the proposals dilute their interest and effectively cede control to the Hiranandani family.

In a statement issued today, Hirco said: “There is a variety of views about the proposed merger and how best to address Hirco’s share price discount. The Board feels it essential that sufficient time is allowed for all views to be considered and discussed.’’

“Therefore, the Board of Hirco proposes to adjourn the 16th January meeting until further written notice,’’ Hirco said. The AIM-listed company said that over the past week, it has met and spoken with a number of shareholders including Laxey Partners. Hiranandani group’s promoter Niranjan Hiranandani was not available for comments.

On December 18, Hirco board approved the acquisition of two special purpose vehicles of the Hiranandani family, which is developing two townships — one at Panvel near Mumbai and the other at Chennai. In response, Laxey issued a letter to the other shareholders claiming that the proposals dramatically reduce the net asset value (NAV) of Hirco shares and reduce chances of cash distributions in the future.

Also, it said that no valuations had been provided and Hiranandani only provided accounts that the company had lost money every year and required a cash injection every year.

The letter claimed that Hiranandani would gain de facto control of the company without paying a control premium, and would be able to control its business on an ongoing basis despite the views of other shareholders. Hirco had called the EGM on January 16 to enable its shareholders to vote on the restructuring proposal and the roadshow was to begin from this week.

Laxey Partners, holds 10.3 per cent stake in the real estate fund. Other leading shareholders in the company include Standard Life and HSBC Holding, which hold 13.11 per cent and 10.13 per cent, respectively.