Icapital.biz Bhd

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Icapital.biz Bhd (ICAP) is a 140mil closed-end fund that IPO-ed in 2005. The fund manager is Capital Dynamics Asset Management Sdn Bhd, led by the venerable and well known investment guru Tan Teng Boo (TTB). Their mandate is to invest in undervalued securities listed on Bursa Malaysia.

TTB, a self professed value investor, hasn't been doing well for the last 10 years, just like many other value investors. In the good old days for value investing (2005 to 2008), ICAP was trading >NAV. Since the advert and post GFC2008, it was always trading at a discount. At most times in the 2010s, TTB held cash at between 50-70% and it is only in the last 2 years since Covid-19, did cash levels dropped to 30s.

In 2012, some vultures (Laxey Partners and City of London) with around 12% stake tried to get themselves into the BOD But TTB threatened to quit if any of them were elected and 50% of total shareholders supported him. Since then, ICAP has had <2% per annum CAGR returns for its NAV for the next 10 years, not much difference with FD returns. As for share price, the returns were negligible and putting your money into FD would have beaten the returns the ICAP shareholder gotten.

As for the (external) fund manager, it happily charged 1.5% of NAV (inclusive of the 50% cash it held) every year. Therefore, the discount between NAV and share price doesn't matter to them. Holding cash doesn't matter (just put them into money markets for 2% and then the fund manager will get 1.5% of it at the end of the year!). Cash buyback will not happen because it will reduce total capital (and hence mgt fees to fund manager).

https://www.icapital.biz/newsletter/sections/ICAP/83
ICAP annual reports: https://www.icapital.my/announcement/annual-reports/

Most closed end funds on SGX have closed as shareholders voted for its liquidation, hence the gap between NAV and share price could be closed. The foreign vulture currently own 22.4% of ICAP since 2022 (built up from ~6% in 2012) and is the biggest shareholder of ICAP. However, it has been stopped from buying more by ICAP BOD (case of using own funds in court process against own shareholder). The fund manager owns ~1.2% of ICAP but has been consistently been able to garner ~32% of total votes to help them to continue to suppress the biggest shareholder's 22.4%.
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