13 questions asked at debut GQG Partners AGM
April 27, 2022
GQG Partners is a Florida-based fund manager which currently manages $US92 billion and raised $1.18 billion selling 20% of its stock in Australia last year. Stephen Mayne was the sole inquisitor at its inaugural AGM on April 27 and this is how it rolled.
1. Who put up the $1.2 billion raised in last year's float? How much of it came from Australian investors and what was the breakdown between retail and institutional? Also, how much of the $1.2 billion went to our executive chairman and founder Rajiv Jain.
Answer: he got 85%.
2. As an ordinary Australian retail investor who came in through the CommSec broker firm offer, why am I not allowed to vote at today's meeting. Of the 6,000+ shareholders listed in the GQQ annual report, how many are like me and not able to vote their shares? What would need to happen to change this situation and give ordinary Australian retail shareholders a vote at next year's AGM?
Answer: you could vote by proxy, just not directly online at the meeting.
3. Did any of the 5 main proxy advisers on ASX listed companies - ACSI, Ownership Matters, Glass Lewis, ISS and the Australian Shareholders' Association – issue reports relating to today's AGM. Were they all in favour Paul Greenwood's re-election and why don't we get to vote on a remuneration report?
Answer: not aware of proxy coverage and Delaware doesn't require rem votes.
4. Many thanks to the board for agreeing to the request to disclose the proxy position to the ASX along with the formal addresses ahead of the AGM. As a bonus, you've also voluntarily thrown in that 148 shareholders voted for Paul Greenwood's re-election and 25 withheld their support. Given Paul was re-elected with more than 99.9% of voted stock in favour, why didn't all directors step up for election and why do we have a staggered board. How could this be changed?
Answer: we like the staggered board which provides stability.
5. Pacific Current is down to just 4% of GQG so why does this give its CEO Paul Greenwood a right to serve on the GQG board and does he have the time to do the job properly? Also, on what basis are Paul Greenwood and Melda Donnelly classified as independent directors when both of them serve on the Pacific Current board. Are they representing Pacific Current? Could lead independent director Elizabeth Proust comment on these independence classifications?
Answer: Proust said they've been very independent in all meetings she has attended.
6. Well done on the $US3.4 billion in net inflows achieved in the March quarter. You noted in the ASX release that the Australian retail channel was strong. Are we benefitting from the underperformance and massive outflows being suffered by Magellan in Australia and how much do we pay to financial advisers when securing a new retail client in Australia. The 49 basis point management fee appears high for institutional investors. What is the average retail management fee and what is the lowest fee an institutional client is paying?
Answer: we don't disclose the breakdowns.
7. GQG Partners raised $1.187 billion from Australian investors at $2 a share in November and with the shares closing yesterday at $1.45, these investors have lost 27.5% of their money or some $326 million. Could executive chair Rajiv Jain comment on whether he has considered taking steps to soften the pain for independent investors given that he retains a $3 billion stake in the company. What about working for no salary until the shares get back above the float price?
Answer: the founders are very aligned and receive no incentive payments.
8. Why don't we move to a model of having an independent non-executive chair, particularly given that Australian investors have lost $326 million on the $1.18 billion they invested in the float and the majority of these funds went to our non-independent executive chair? If Magellan and Platinum can operate with an independent chair, why not GQG? Could Elizabeth Proust comment on whether the board will consider this.
Answer: no plans to change. Works well to align investment function with chairmanship.
9. Could Rajiv and Tim please comment on what their intentions are once their shares come out of escrow in August this year. Are we likely to see a material change in their shareholdings by the time we gather at next year's AGM and why did the escrow arrangements only last for 9 months after the float rather than a longer term horizon, such as 2 or 3 years?
Answer: no plans to sell, 9 months was the advice and it has been suggested we get the free float up from 20% to 30% at some point.
10. Executive chair Rajiv Jain made some very strong comments at a forum in February saying that reducing investment in fossil fuels was “elitist” and “immoral” because of the impact it could have on developing economies. Were these comments pre-approved by the full board and could Rajiv update shareholders on what response these comments generated from stakeholders.
Answer: no pre-approval from board and billionaire chair gave a passionate defence of investing in fossil.
11. Why did we register in Delaware, the most shareholder-unfriendly jurisdiction in the US, which doesn't even require a non-binding vote on remuneration reports? What motivated this decision? Will you commit to voluntarily giving shareholders a vote on a remuneration report at next year's AGM and what about also voluntarily removing the staggered board and putting all directors up for election at next year's annual meeting?
Answer: Delaware is great, which is why most US companies register there.
12. Could the executive chair and lead independent director Elizabeth Proust both comment on GQG's approach to ESG investing, particularly the decision to have 4 oil giants Exxon Mobil, Petrobras, Occidental Petroleum and Exelon Corp in the top 10 holdings of the GQG Partners Global Equity Fund. What is the current situation in terms of GQG being negatively screened by clients because of our large exposure to fossil fuels? Has this contributed to the recent poor performance of the share price despite strong inflows and returns?
Answer: Chair repeated his argument about 80% of the world's population not being able to afford a $10,000 car, let along a $US45,000 Tesla. Proust said debate was playing out in our election as contested territory.
13. Given the interesting discussions across a range of topics today, could the chair undertake to make an archived copy of the webcast plus a full transcript of proceedings available on the company's website? Elizabeth Proust serves on the Lend Lease board, which publishes a full transcript of its AGM. Are we prepared to do likewise, including transcripts of all the excellent and informative presentations by our executive team.
Answer: no transcript and sounded like we wouldn't get a webcast archive either.
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