Shareholders in alternative finance-focused investment trust VPC Specialty Lending (VSL) used the firm’s annual general meeting (AGM) to call for a more diversified portfolio, as well as better communication from the board, and a simplified investment proposition.
Investors also aired their frustrations about an alleged conflict of interest of board member Richard Levy. As well as acting as a director of VSL, Levy is chief executive of the investment manager – Victory Park Capital Advisors – and he is also the controlling person of the SVS Opportunity Fund, which held 19.21 per cent of the voting rights of the company at the time of the AGM.
34.23 per cent of shareholders voted against Levy’s re-election. In response, Levy announced his intention to retire from the board, and the board has now commenced a search for his replacement.
24.67 per cent of shareholders voted against the re-election of VSL’s chairman Kevin Ingram, after he was criticised for failing to address on a timely basis Levy’s perceived conflicts of interest. Ingram was also blamed for the first set of continuation vote proposals which were presented to shareholders on 21 May.
Earlier today (23 October), VSL announced that it had begun to search for a new chairman, ahead of Ingram’s retirement by June 2021.
The shareholder criticisms came to light after a post-AGM consultation. It found that the primary concerns of VSL investors were the conflicts of interest at the board level, the refreshment of the board, and the communication between the board and the shareholders.
Shareholders also asked the board to simplify the way the investment manager presents the investment proposition, and to build exposure gradually when diversifying the portfolio.
Shareholders also praised VSL for its investment performance, particularly since March this year, and highlighted the trust’s strong returns and the risk mitigation measures put in place by the investment manager.
They also praised the company’s NAV performance, which “stood out against that of the sector”, and expressed their appreciation for VSL’s ability to maintain dividends during a “very challenging period”.
“The board is considering the views expressed about perceived conflicts and will provide an update to the market once it is in a position to do so,” said a company spokesperson, in a statement to the market.
“In relation to concerns expressed about board communication, shareholders welcomed direct engagement with the board and the majority of those consulted would like this to be regular and extend beyond the chairman. The board will therefore offer to meet the larger shareholders on a regular basis.
“The board takes all the concerns raised seriously and is committed to addressing them over the course of the coming months. The board is working on all these areas and will keep shareholders updated on progress.”