Tension between Cromwell Property Group and its largest shareholder ARA Asset Management has racheted up a notch after the Singaporean investor withdrew its representative from the fund manager’s board.
As foreshadowed in Street Talk, ARA Australia boss David Blight has tendered his resignation, ending his year-long stint in Cromwell’s boardroom.
Relations between the Brisbane-based fund manager, led by Paul Weightman, and its largest shareholder have been strained for some time. The catalyst for Mr Blight’s exit came after Cromwell’s board decided not to allocate discounted shares to Blight’s ARA as part of a $375 million institutional placement.
Cromwell, on the advice of its lawyers, deemed ARA a related party and rejected ARA’s bid for stock.
The Singaporean platform believed that there was sufficient precedent to allow it to partake in the raising. Its stake has narrowed to 18.05 per cent from 20.58 per cent previously.
ARA is understood to have found its position to have become untenable after the exclusion from the raising and expressed its disappointment to the Cromwell board in Mr Blight’s resignation.
There have been further points of potential conflict in recent months where Cromwell and ARA have bid for the same assets in Australia, including 400 George Street and 133 May Street, both in Brisbane.
But ARA had believed those conflicts to be manageable.
Friction over company strategy also arose between ARA and Cromwell after differences over Cromwell’s takeover bid for British-listed RDI REIT fell over.
In May, ARA requested Cromwell’s shareholder register, a move that can be a preliminary step to calling a shareholder meeting, prompting Cromwell to warn its own shareholders to treat any unsolicited communication from the Singaporean player “with circumspection”.
Despite Mr Blight’s exit, ARA is showing no sign of giving up its stake in the fund manager, prompting speculation it could look to restore its earlier position.
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