Property investor Robert Tchenguiz has returned to shareholder activism with a campaign to restructure a listed real estate lender in which he owns shares, after years embroiled in litigation over a failed probe by the Serious Fraud Office.
Mr Tchenguiz on Tuesday said his company, R20 Advisory, had built up a 12.6 per cent stake in Urban Exposure and had written to its board proposing to restructure it as a listed debt fund.
“UK plc is riddled with these types of companies where they sell mixed messages, and mixed messages are not what the investor base wants,” Mr Tchenguiz said. “This is a prelude to a much bigger one I’m working on.”
Before the financial crisis Mr Tchenguiz was one of the UK’s most aggressive activist investors, intervening in companies such as the pub group Mitchells & Butlers and supermarket J Sainsbury before the lending behind many of his stakes collapsed in the crisis.
He and his brother Vincent Tchenguiz were arrested in 2011 in a Serious Fraud Office investigation into the Icelandic bank Kaupthing, prompting years of litigation that lowered the brothers’ profile as investors.
The SFO later dropped its investigation into the brothers, and in 2014 it apologised to the pair and paid them £4.5m in damages. Related lawsuits continued until last year, however, when Robert Tchenguiz dropped a legal case against accountancy firm Grant Thornton and several other defendants, after reaching an agreement with Kaupthing.
He said at that time that he hoped to rebuild his business interests. But he now operates separately from his brother, who has amassed a biotechnology portfolio and owns billions of pounds of residential freeholds.
This year Robert Tchenguiz expressed support for an activist campaign being waged by the US fund Coast Capital at First Group, the rail and bus company, in which he also owns shares.
Listed on London’s Aim in 2018, Urban Exposure lends to residential property developments in the UK from its own balance sheet and manages loans financed by third parties, such as the private equity giant KKR.
It trades at a discount to net asset value of 25 per cent, Mr Tchenguiz said. Shares traded at 57.8p each when markets closed on Tuesday.
Mr Tchenguiz said: “The guy who wants exposure to the debt [issued by Urban Exposure] currently has to take a risk on the management.”
R20 proposes carving out the management company from Urban Exposure, saving what it said would be £12m-£13m a year. It said the management company would be majority-owned and controlled by Urban Exposure.
R20 said the group should pay a dividend of 30p a share, worth a total of £47.5m, and should also issue 100m new shares at 35p to improve liquidity in the stock. It said it would underwrite 57 per cent of those shares and had identified a broker for the rest.
The group said the new structure would mirror that of publicly traded debt funds such as Starwood European Finance.
Urban Exposure said: “The board of Urban Exposure notes the announcement by R20 Advisory Limited . . . [it] will evaluate the proposal from R20 and will issue a further statement if and when appropriate.”