Amendments to the Investment Management Agreement

RNS Number : 4784V

Intl. Biotechnology Trust PLC

18 April 2016

 

18 April 2016

International Biotechnology Trust plc

Amendments to the Investment Management Agreement

Further to the announcement on 09 December 2015, International Biotechnology Trust plc (the Company) announces that the Directors have agreed with the Company's investment manager, SV Life Sciences Managers LLP (the Investment Manager), amendments to the performance fees payable under an amended and restated investment management agreement (the IMA).

Under the IMA, the management fee payable to the Investment Manager (0.9% per annum of net asset value) remains unchanged as do the key principles of the annual performance fee:

-      The portfolio consists of two investment pools: quoted and unquoted.

-      The fee on the quoted pool is 10% of relative outperformance above the sterling-adjusted NASDAQ Biotechnology Index (NBI) (the Benchmark) plus a 0.5% hurdle.

-      The fee on the unquoted pool is 20% of net realised gains, taking into account any unrealised losses but not unrealised gains.

-      Total performance fees will continue to be subject to a cap and losses on both portfolios will continue to be carried forward but both on changed terms.

Under the terms of the IMA, the annual payment of the performance fee is now subject to new limits which include a reduction in the performance fee cap (from 3% to 2% of net assets), any underperformance of the quoted portfolio against the Benchmark being carried forward for the current financial period plus two preceding periods, performance fees in excess of the performance fee cap being  carried forward for the current financial period plus two preceding periods and being offset against any carried forward underperformance before being paid out and the removal of a high water mark for the quoted portfolio.  Further details on the changes are outlined below. 

The Board and the Investment Manager have agreed that the amendments to the performance fee will be implemented as if having taken effect from 01 September 2015.  As at 29 February 2016, no performance fee is payable to the Investment Manager under the proposals or would have been payable under the previous performance fee arrangements.

Further details on the revised performance fee arrangements:

-      Revised performance fee cap - The maximum performance fee in any one year is reduced to 2% of the net assets as at the financial year end for the relevant period (the Performance Fee Cap).  This Performance Fee Cap will be split pro-rata between the quoted and unquoted pool;

-      Underperformance is carried forward - In the case of the quoted pool, any underperformance of the Benchmark (excluding the hurdle) within a relevant financial year, will be carried forward for the current financial period plus two preceding s periods of the Company and, if a performance fee becomes payable for the quoted pool in such future period, such performance fee will first be offset against any carried forward underperformance before being paid;

-      Excess performance over the Performance Fee Cap is carried forward - Any performance fee that is earned in excess of the Performance Fee Cap in any performance period is carried forward and, in the case of the quoted pool proportion, used to offset future underperformance of the quoted portfolio for the current financial period plus two preceding periods.  In a subsequent year where a performance fee is due, and provided all historic carried forward underperformance has been offset, then any remaining carried forward performance fee will also be paid (subject to the prevailing Performance Fee Cap).  Any carried forward performance fee that has not been offset against historic underperformance or otherwise paid out will be paid to the Investment Manager in the third year after it became payable, subject to the Performance Fee Cap;

-      Payment of performance fees on termination - On termination of the Investment Manager other than for cause, any unpaid performance fees will become payable, subject to a cap of 4% of net assets for the performance period in which the Investment Manager's appointment is terminated.  This will allow the Investment Manager to be paid any historic fees that were previously deferred; and

-      Removal of high water mark - The performance fee will no longer be subject to a high water mark on the quoted portfolio.  If after accounting for any carried forward underperformance and adding back any carried forward performance fees in a particular period, the current period's performance is still negative, no performance fee will be payable in that period.

The amendment to the performance fees payable to the Investment Manager, who is a related party of the Company under the Listing Rules, amounts to a smaller related party transaction under Listing Rule 11.1.10R. Cenkos Securities, the Company's Sponsor, have independently confirmed that the proposals are fair and reasonable so far as shareholders of the Company are concerned.  In providing its advice to the Board, Cenkos Securities has taken into account the Board's commercial assessment.

Enquires:

BNP Paribas Secretarial Services Limited

Company Secretary

Tel: [phone]

SV Life Sciences Managers LLP

Investment Manager

Nick Coleman

Tel: [phone]

 

END

 

 

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