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Close faces Murray VCT problems as Aberdeen still holds fund rights

Close Venture Management will be hamstrung in its run-ning of the three Murray VCTs because Aberdeen still holds investor rights on most of its holdings.

IFAs are concerned over the deal – which sees Close VM take over management of the funds in July – because,in most cases, Close will not have board representation on the holdings in the three Murray trusts, let alone full institutional investor rights.

Hargreaves Lansdown inv-estment manager Ben Yearsley says: “It is a complete mess and the Murray boards have created this problem.”

Close had expected that its input would help turn the companies round and increase their value before they came to market but, for most holdings in the Murray funds, Close VM will have no more information or input than a retail investor.

Close VM managing director Patrick Reeve admits that he is not familiar with the small print of the companies’ arrangements with Aberdeen but says that he does not foresee problemsReeve says: “Murray and Aberdeen did not structure their deals the way we do but I do not see a problem.”

But, in effect, Aberdeen will have a much bigger say in the running of these companies than Close VM, which will be very much the minority shareholder.

The boards of the three Murray VCTs last month sacked Aberdeen Venture Capital Managers and brought in Close VM.

Aberdeen runs 18 funds which invest in private equity and their holdings were split between these funds and the Murray VCTs but when the Murray holdings are stripped out, Close will only hold tiny stakes in most cases.

Aberdeen fund manager Judith MacKenzie says Aber-deen will not give up these rights to Close VM, especially as the bid from Close VM was hostile. Aberdeen also holds loan debenture stock from many of the holdings, which need to be split between Aberdeen and Murray.

MacKenzie says: “In most cases, we hold the full institutional investor rights and are not keen to give these up and the companies do not want us to. Close VM will have to accept that it will not get full institutional rights.”

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