Activist investor to list on ASX

Open to opportunity: Sandon founder Gabriel Radzyminski. Photo: Andrew Quilty

Source: AFR , Stephen Shore

Gabriel Radzyminski, the man behind several high-profile activist plays on the sharemarket over the past few years, is preparing to list his own fund, Sandon Capital Investments, on the Australian Securities Exchange.

Mr Radzyminski, who also sits on the board of Ron Brierley’s activist fund Mercantile Investment Company, plans to raise $50 million for Sandon, which is expected to start trading on the ASX before Christmas.

Activist investing has a long tradition in the United States with famous hedge fund players including David Einhorn, Carl Icahn and Bill Ackman.

In the past six months, the strategy has become more popular in Australia, with veteran investor Mark Carnegie launching the Companion Fund.

Unlike a traditional fund manager, which tries to identify a catalyst that could change the company’s fortunes, Sandon looks for an opportunity to create the catalyst to unlock the value.

“We seek to buy value cheaply, but only where we can see a means by which we, and or others, can take steps to unlock and realise that value,” Mr Radzyminski said.

Mr Radzyminski founded Sandon Capital in 2008. For the past four years the fund has operated out of the limelight, establishing its track record.

Sandon has returned 25.6 per cent net of fees over the past 12 months, compared with a 1.4 per cent gain in the Small Ordinaries Index, and delivered an annualised return of 14.3 per cent since inception in September 2009. The Small Ordinaries has delivered an annualised return of 1.1 per cent over the same period. At present, Sandon has funds under management of just $10 million. For the past four years it has relied on the clout of larger fund mangers with deeper pockets to help it achieve its activist ends.

Geoff Wilson’s Wilson Asset ­Management is one of Sandon’s most enthusiastic supporters. Sandon has acted as an adviser and co-investor to Wilson in several situations, including Australian Infrastructure Fund, RHG Group, Alesco and Premium Investors.

Mr Wilson said he intends to personally invest $1 million in Sandon.

“I think Gabriel’s an exceptionally talented individual and he has an incredible gift in identifying significantly undervalued companies.”

On Wednesday, Global Mining Investments’s shareholders voted in favour of resolutions to appoint new directors and recapitalise itself under the name, Sandon Capital Investments Limited. Sandon Capital owned 14.9 per cent of GMI and spent the past 11 months fighting to avoid GMI’s liquidation after it was restructured in December last year.

Sandon’s management fees are still subject to board approval, but are likely to be 1.25 per cent plus a 20 per cent performance fee above the cash rate, with a target dividend yield of 6 per cent.

Last month, research firm van Eyk gave Sandon an A rating. Van Eyk’s deputy CIO and head of manager research Matthew Olsen said Sandon was “a different source of alpha to the typical Australian equity fund”.

“There’s a low level of correlation between Gabriel’s strategy and most other long-only investment strategies, so it’s a good source of portfolio diversification. It’s also performed quite well in down markets.”