Amp China Capital Growth Fund – Exhibit 2: Premiums and discounts for Australian listed mutual funds as at 31 March 2015 (PRNewsFoto/Metage Capital Limited)
Metage Capital Limited has continuously invested in AMP Capital China Growth Fund (AGF) since February 2012 as the investment manager of various funds. We believe the most pressing issue for all AGF unitholders today is a significant reduction in net asset value. (NAV) fund suffers from it. Even if the market value of the fund’s assets is much lower than the determined fair value of its portfolio, all unit holders are penalized heavily for committing their capital to this AMP fund. We believe that good corporate governance in these circumstances requires that the Board’s primary deliberations focus on providing a significant reduction to the fund’s underlying NAV.
Amp China Capital Growth Fund
AGF has suffered from this unacceptable reduction for eight years and this continues in a stable and weak economic market environment. In fact, the board manages the fund with one of the worst discounts in its peer group.
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For this letter to the board, we provide a history of reductions for comparable listed funds that invest in China using significant allocations to China A-shares as part of their mandates.
Two things are evident from this analysis. AGF is one of only two funds that does not undertake share buybacks or discount management tenders – there is no need to trade closely enough to match the other fund’s NAV; And AGF’s discount is double its peer group average over the past one, three and five years. In addition to comparing AGF to its A-pay global peer group, we highlight how AGF compares to the Australian listed investment fund sector. The chart below shows premiums or discounts for all ASX listed investment funds
Compared to its Australian listed peers, AGF stands out as the worst fund at a discount to NAV by a significant margin. Because the board allowed such an extraordinary reduction in portfolio value to continue, AGF investors who had to realize their investments faced an effective 24% penalty when they did so.
In our view, capital management through share buybacks or tender offers is the most common and effective form of discount control for listed funds. If made at a discount, such actions are relative to the fund’s NAV and are particularly relevant given the exceptionally wide discounts of the AGF. Such actions may also allow the Fund to downsize to meet the demand of the original outstanding investors. Finally, and especially in the case of AGF, undertaking such capital management activities demonstrates a clear commitment of the fund. It is the company’s responsibility to ensure that the interests of its investors are paramount and to rule out any question that the board’s interests or views conflict with those of its investors.
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From that date to the end of April 2015, the fund’s performance increased by a total of 271%.
. During the same period, unitholders saw their unit prices increase by only 50%, but received dividends equal to 39% of the value at the beginning of the period.
. It is very less compared to the asset class in which the unit holders invest. We note that AMP Capital was paid more than $42 million in investment management and responsible firm fees for this number.
Metage Capital has repeatedly attempted to engage constructively with the Board with proposals to address the above issues in the best interests of all investors. To date, we have found this experience disappointing. We therefore reiterate our previous two requests in this open letter:
Amp Ltd.: Oversold (otcmkts:amltf)
In November 2016. If the Board does not satisfactorily resolve the issues we raise in this letter by this time, Metage Capital will direct its vote against extending the investment management agreement for another ten years. We have decided to publish this letter as an open letter to all unitholders to raise awareness of next year’s vote and to highlight our concerns on corporate governance at the Fund. In February, mega rounds dominated venture funding, with ten companies receiving investment. $100 million or more, five of which exceeded $200 million. Seven of the ten companies involved in ADAS and autonomous driving, building electric vehicles or manufacturing vehicle components were the big winners. The largest round this month falls into the latter category, at nearly $500 million for a maker of semiconductor devices for automotive and other applications. In total, companies involved in the car market in one way or another received more than $2 billion, which is two-thirds of the month’s total. That doesn’t include the $1.35 billion raised by GM’s Cruise self-driving unit.
Another area that stood out last month was AI hardware. It’s worth noting that each of the six companies profiled has a unique take on the architecture that makes a good AI system, from photonics and in-fiber computing to analog. Additionally, design services, flexible electronics, test equipment, DRAM and a new Chinese EDA company are among the 95 companies that have raised more than $3 billion in February 2022.
Design services firm SemiFive has raised $109.0 million in Series B funding from BonAngels, Game Changer, Korea Investment Partners, LB Investment, Mirae Asset Venture Investment and Pavilion Capital. The startup offers platform-based custom design services for data-accelerating SoCs using AI, Edge, AIoT and Samsung Foundry, with plans to expand into HPC and automotive. Using templates and an IP library, it aims to reduce the cost and time required to create custom silicon. The funds will be used for R&D, recruitment and IP development. “With the strong support of our investors, we are accelerating our strategy in the US, which is a critical foundation for business expansion and additional opportunities. Anticipating strong growth, we are expanding our sales, customer and technical support organizations,” said Brandon Cho, CEO and founder of SemiFive. Founded in 2019, it is based in Seongnam, South Korea and has raised $147 million to date.
Smart Logic Technology has raised $100.0 million in Series C funding from CICC, Grand Flight Investment and TFTR Investment. Smart Logic has developed its MaPU algebraic processor architecture that combines the programmability and versatility of a processor, the flexibility of an FPGA and the efficiency of an ASIC, complete with a parallel data supply architecture. The company has used it in many chips, including processors for cellular communications, deep neural networks and multimedia. Founded in 2016 based on research by the Chinese Academy of Sciences, Smart Logic Technology is based in Beijing, China.
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Cloonix Technology has raised CNY 400.0 million (~$63.3 million) in a pre-Series A+ round led by Chaos Investment, Rencent Capital, China Merchants Securities, Share Capital, Huayi Capital and existing investors Qianhai Fund Fund, Oceanpine Capital. Ondin Capital, Sunic Capital and Goldensand Capital. Clonics develops customizable network chips, including high-performance programmable Ethernet switching chips and cloud networking software. The funds will be used for R&D, product commercialization and recruitment. Based in Hangzhou, China, it was founded in 2020.
Lisuan Technology has raised “hundreds of millions” of yuan (RMB 100.0 million – $15.8 million) in angel funding from Delta Capital, Jiangmen Ventures, Zoo Capital, Oceanpine Capital and Sharelink Capital. Lisuan Tech is developing a GPU for high performance graphics based on its Pangu architecture. It also uses AI techniques to improve GPU tasks and PPA. Lisuan Tech plans to make its first chip based on the 6nm node available next year and eventually aims to target a variety of end products, including cloud, edge and client devices. Based in Nanjing, China, it was established in 2021.
Menta secured a €7.5 (~$8.5 million) loan from the European Investment Bank to support its growth and development. Menta offers standard cells with embedded FPGA IP for SoC, ASIC or ASSP designs. Available as soft RTL or hard GDSII IP, eFPGA IPs support a wide range of casting processes. A toolchain is provided for generating bitstreams from RTL, including synthesis. Founded in 2007, it is based in Sofia-Antipolis, France.
Gangmo Semiconductor, also known as Common Mode Semiconductor, has raised “tens of millions of yuan” (CNY 10.0 million – $1.6 million) in a pre-Series A round from Oryza Holdings, Summitview Capital and others. The startup develops analog chips, which currently include ADC/DACs, amplifiers, RF ICs and power supplies. Founded in 2021, it is located in Suzhou, China.
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Ozark Integrated Circuits has received a $0.2 million grant from the US Department of Energy to develop a high-temperature health monitor that measures the condition of molten salts used in molten salt-cooled nuclear reactors. Ozark IC manufactures a non-reactive probe using silicon carbide (SiC) and gold materials proven for temperatures of 500°C to 800°C (930⁰F to 1500⁰F). It also manufactures analog front-ends for instrumentation. The company provides consulting services focused on boards, ICs, sensors, packages and extreme environments. Established in 2011, it is based in Fayetteville, Arkansas, USA.