AMP proposes changes to China fund after investor dissent

[SYDNEY] AMP Capital Ltd plans to make operational and governance changes to a China fund, heeding calls from one of its investors to narrow the stock fund's discount.

AMP Capital plans to implement the Shanghai-Hong Kong stock trading platform, improve the marketing of the AMP Capital China Growth Fund, establish an advisory committee, provide daily net asset value estimates and clarify the components of the fund's fees, the Sydney-based firm said in a statement.

"We believe these changes are in the best interests of all investors," chairman of the China fund's responsible entity, Stephen Dunne, said in the statement.

AMP "took the view that the fund continues to provide Australian retail investors with access to the China A-share market, which is consistent with its original purpose, and should continue to operate in its present form."

LIM Advisors, a Hong Kong-based hedge-fund firm overseeing about US$2 billion, doesn't think the proposals go far enough to reduce the discount and still plans to seek a meeting of unit holders to thrash out ways to impose a 10 per cent discount ceiling, Nick Paris, a director and portfolio manager at LIM said in an e-mailed statement.

The China growth fund, a closed-end pool that invests in yuan-denominated shares listed in China, traded about 23 per cent below its net asset value on Sept 7, giving it a market value of A$454 million (US$327 million) AMP's planned changes are the result of a review, with the assistance of Goldman Sachs Group Inc, to investigate a range of options to improve fund performance.

The fund has been trading below net asset value since 2007, with the discount averaging 21 per cent in the period, according to data compiled by Bloomberg.

LIM has been a unit holder of the AMP fund since 2010 and its 13 per cent stake ranks it the largest independent unit holder, it said in a statement Sept 2. AMP Ltd. is the largest unit holder with a 32.56 per cent stake, according to data compiled by Bloomberg.

BLOOMBERG