Veteran City fund manager Christopher Mills has revealed details of his new investment company, Achilles, which has set its sights set on poor performing trusts.
Mills, who is the founder, chief executive and chief investment officer of Harwood Capital, has teamed up with Robert Naylor, former chair of the Hipgnosis Music Royalties trust to launch Achilles.
The pair worked together to achieve an exit for investors at Hipgnosis Songs Fund and more recently is working with PRS Reit on a strategic review.
Achilles will invest in no more than four investment trusts at a time, and they will be in the alternatives sector, including real estate and infrastructure as Mills says “that is where the best opportunities are”.
Mills told FT Adviser: “The aim is to invest in up to four of the alternative investment trusts on the London market, and work with those trusts to improve corporate governance, and to narrow the discounts those trusts trade at.
“What we are not trying to do is be another Saba, and increase the assets under management of Achilles or of Harwood.”
Saba Capital is the US hedge fund which recently sought to take control of seven British investment trusts — though this was rejected by shareholders.
It has now targeted four other trusts, seeking to turn them into open-ended funds.
Mills said he believes one outcome of the current wave of activism is that fund management firms will no longer be able to get multiyear contracts to run investment trusts, and instead the reviews will be annual.
Achilles recently raised £54mn in its recent flotation on the London Stock Exchange.
The launch of Achilles is the first investment trust IPO since 2023.
There is no intention for Achilles to raise any more than the £54mn already gathered — of which £1.5mn was Mills personal money.
The target for the fundraise was between £50-60mn, and Mills said in the current tough market conditions he regards raising £50mn as an “achievement.”
Naylor has become an employee of a subsidiary of Harwood Capital, and will run the Achilles Investment Company on a day-to-day basis, with Mills “actively involved”.
Discounts
Mills acknowledged that his attempts to be an activist investor, focused on reducing investment trust discounts, is hindered somewhat by the fact the largest trust he personally manages, North Atlantic Smaller Companies, trades at a discount to its net assets of 33 per cent.
It’s an £744mn of assets trust in which Mills has a roughly 30 per cent stake.
He said he has been diligent in his attempts to narrow the discount, including through share buybacks, greater media presence, and twice yearly shareholder meetings.
Mills said a particular challenge for his trust is that many of the shareholders are, like himself, long-term in nature, and so are not selling their stock.
The trust has bought back around 25 per cent of its shares over the past year or so.
Mills did not sell any of his holding and said he would in fact like to buy more shares in the trust himself, but is forbidden from doing so under stock market rules.
This is because individuals or entities are not permitted to own more than 30 per cent of a listed company in normal circumstances without being obliged to make an offer for the whole business.
This means there is very little liquidity in the shares, as, despite it trading at a large discount, there are few shares for sale on the open market, which, according to Mills, means the larger wealth managers have been unable to invest in the trust.
david.thorpe@ft.com
