SHAREHOLDERS are gearing up to oust the chairman of Ranger Direct Lending (RDL), who they blame for the alternative finance-focused investment fund’s lacklustre performance.
Peer2Peer Finance News has learned that shareholders have submitted a proposal to expel chairman Christopher Waldron from the board, with a vote due to take place during the annual shareholder meeting on 19 June.
This follows a tumultuous year for the London-quoted fund, which saw its net asset value (NAV) plummet amid a costly legal case with Princeton and an unpopular change in the investment strategy.
Read more: Ranger NAV flatlines amid fund closure talks
“We feel the chairman should take responsibility for the loss of NAV from investing in Princeton and from a very muddled approach to the strategic review which started in January,” said Nick Paris, director of RDL shareholder LIM Advisors in London. “Somebody should take the blame for the losses last year and what’s been going on this year.”
LIM Advisors has joined fellow shareholder Oaktree Capital Management in calling for the fund to be wound down. The shareholders – which own a combined 28 per cent stake in RDL – have concluded that the fund is unable to scale up to a sufficient size, and both LIM and Oaktree have expressed concerns about the new investment management strategy.
On 1 May, RDL fired its fund manager Ranger Alternative and nominated California-based Ares Capital Management as a replacement. However, it is believed that shareholders will reject Ares’ nomination and join LIM and Oaktree in calling for the fund’s closure.
“Our board has been rash enough to fire our manager,” said Paris. “So they now have just 11 months to find a new one. If the board doesn’t get Ares voted in, then frankly I think they should all resign.”
A well-placed source told Peer2Peer Finance News that Ares’ appointment is unlikely to go through, thanks to widespread discontent among RDL’s shareholders, and a lack of transparency around the hiring process. According to several sources, the board failed to consult with shareholders, leading to speculation of bias in the appointment.
“We’ve spoken to a number of shareholders and ZDP holders and we’ve urged a lot of them to approach the board and asked them to not appoint Ares,” added Paris. “Initially we were in favour of the idea of appointing Ares. However, they invest in sophisticated structed products rather than loans so that’s significantly different to what Ranger does. We’re wary, particularly at a time when there’s a turn in the bond market and we’re concerned that this is not a smart move.
“We think Ares is a credible manager, but we no longer support the plan to hire them and we now believe that the fund should be wound up.”
Paris added that he expects RDL to call an extraordinary general meeting to take place on the same day as the annual shareholder meeting. Under market guidelines, this announcement would have to be made by Friday 1 June at the latest.
Meanwhile, it has been confirmed that influential proxy adviser the International Shareholders Service is preparing a full report on RDL which will be released next week.
A source close to the fund said: “Every shareholder who has had a presentation from Ares has been impressed by their senior level commitment to the fund, track record and the credit enhancing structure they propose for making loans going forward.
“Activists have privately conceded that the Ares proposal was of a very high quality.”
RDL declined to comment.