We have two situations which are public. The first is NBI Industrial Finance in India, a company which owns shares of a major listed cement company worth almost five times its market cap and which carries on almost no other business.

This month, we sent an open letter to the board which we also released to the press and uploaded to a dedicated website (link).

The letter was structured as a list of questions, in line with our policy of first seeking explanations for corporate behaviour before making our own suggestions.

In the first instance, we are asking: 1) why the company doesn’t pay a dividend despite receiving substantial cashflows from its investments, 2) how the company is responding to changes in dividend distribution tax, 3) how the company plans to address double-taxation of long-term capital gains, 4) how the company proposes to tackle the persistent 80%+ share price discount, and 5) the purpose of maintaining a listing when the company essentially holds only one asset which is also listed on the same stock exchange.

We have already received a response from the chairman which has (unsatisfactorily) addressed some but not all of the questions.

Our next step is to continue publicising our engagement with NBI which will help to drive more traffic to the website and flush out other minority shareholders before the upcoming AGM.

Simultaneously we are working on our next communication with the company, which is likely to include concrete proposals for shareholder value enhancement.

With the stock trading at such a large discount to the value of its primary asset, we believe there is significantly more upside.

We are also positive on other Indian holding companies due to the tax changes this fiscal year which we have outlined in previous newsletters. In the fund we have several other positions besides NBI and, as far as we are aware, Metrica is unique in offering investment vehicles which capture this opportunity.

Our second engagement situation is in the event-driven portfolio. Accordia Golf Trust in Singapore has agreed to sell most of its assets at what is in our view a very disadvantageous and opportunistic price. Metrica is one of a group of shareholders (led by Hibiki Path) calling for an urgent EGM with an agenda aimed at clarifying and enhancing several aspects of the upcoming transaction.