Invesco fee dispute sees £150m Jersey trust board members step down

Thursday 28 June 2018

A hostile dispute between one of Britain’s biggest money managers and the board of a £150m Jersey trust yesterday reached an abrupt and bittersweet conclusion.

Invesco Perpetual agreed to cut the allegedly excessive fees it had been charging to manage the Jersey-registered Invesco Perpetual Enhanced Income trust – but the two trust board members leading the case against them have stepped down.

Chairman of the Board, Donald Adamson, who lives in Jersey, announced his intentions to stand down with immediate effect. Richard Williams, Chairman of the Management Engagement Committee, also stated that he would leave his role. 

The dispute started after the Board of the trust suggested that multi-national Invesco, which had been appointed to manage the assets of the trust, billed them too much for their services, racking up £12.3million in fees between 2007 and 2017.

Invesco apparently declined to cut those fees, and resigned in April, leaving the trust without an investment manager.

The moves led the board to accuse Invesco of acting against the best interests of shareholders – many of whom reside in Jersey.

But things became more complicated as Invesco was also the trust’s largest shareholder. Such status meant that the company was able to take the rare step of summoning an “extraordinary” shareholder meeting on 20 July – and use that platform to call for Mr Adamson and Mr Williams to be ousted.

In a statement released earlier this month, however, Henley-based Invesco said that they had been happy to cut their fees, and that the real reason they had resigned as managers was down to the “overly aggressive” tactics of the Jersey trust’s board members. 

The Board responded by calling the EGM request a, “...cynical attempt to use Invesco’s concentrated voting power against small private invetors, who, as platform-registered owners or wealth management clients, constitute the majority of the owners of this company.” 

Amid allegations from both sides, the City financial watchdog asked for information from both parties.

Now, just two weeks later, both Invesco and the Board say they’ve resolved matters. A statement released yesterday afternoon said that, pending approval from the Jersey Financial Services Commission, Invesco will be reappointed as managers of the trust, but charging lower fees, and with a reduced notice period:

"Following discussions between the Board and Invesco Fund Managers Limited (Invesco), and following a process to consult with major shareholders, the Board has determined, subject to JFSC consent, to reappoint Invesco as the manager of IPE on a revised management fee basis of 80bps on first £80m of net asset value, 70bps on next £70m and 60bps thereafter. These terms reflect the previously agreed arrangements between the parties.  The existing performance fee arrangements will be removed and the notice period reduced to 3 months.  These new arrangements will take effect immediately and will be deemed to have had effect from 1 January 2018."

Addressing the two departing board members, the statement explained that Chairman of the Audit Committee, Peter Yates, will lead the board while a replacement chair is found. 

“This process is being initiated immediately by the Board instructing an independent agency and is expected to complete by the end of September,” it read.

The Extraordinary General Meeting will still go ahead on the 20 July, but Invesco promised that it would abstain from voting on any resolutions.