Specialist investment firm Hygrovest Ltd (ASX:HGV, OTC:MMJJF) has executed an Investment Management Agreement (IMA) with HD Capital Partners Pty Ltd to be the company's new investment manager for the next five years.
The IMA for HGV’s investment portfolio was signed with HD Capital after a comprehensive invitational tender procedure and meticulous negotiation.
This step is also seen as pivotal in diversifying HGV’s portfolio, transitioning from its existing focus on cannabis businesses to encompass a wider array of investment opportunities, predominantly in the listed securities domain.
HD prides itself on identifying undervalued, robustly managed growth companies, frequently steered by their founders, which might not yet be on the mainstream investment community's radar.
Diversifying portfolio
The board of HGV is optimistic about this new alliance, anticipating that the partnership with HD will unlock new investment avenues, optimise the value of the existing portfolio and substantially diminish the fixed cost structure.
HD possesses a track record of pinpointing investments in undervalued securities aiming to unlock their potential value and navigating investment scenarios contingent on explicit corporate actions, including mergers, divestments, tender offers and liquidations.
Incentivises performance
The IMA incentivises HD’s performance through remuneration that is amplified upon HD delivering material increases in HGV’s net asset value beyond its high-water mark.
HD’s interests are further aligned with those of HGV’s shareholders via its Capital H Inception Fund and Capital H Active Fund, which together hold approximately 10.8% of the issued capital of HGV.