Recent significant shareholder changes are raising talks of a takeover or at the least a change in the manager of the trust.

On Thursday a significant shareholder notice was filed by Paul Dalla Lama and related North West entities declaring a shareholding of 18,081,670 shares or 6.2%.  North West is a Canadian based property group which includes North West Healthcare Properties, a property fund that owns 55 Canadian Healthcare properties.  A large portion of these shares will have been purchased from the ACC who released a notice stating they have sold all of their 16,031,099 shares.

It is possible that North West is looking to acquire Vital Healthcare but a more likely scenario is that they are looking to buy the management contract from ANZ and the shares they have purchased will be used as a blocking stake.  If North West was to buy the management contract they would also purchase ANZ’s 26,100,587 shares (9% of Vital) giving them a 15.2% holding.  This would be a stake large enough to make it very difficult for investors to remove the manager.

A change in Vitals management will be negative for two reasons.  Firstly it means an internalisation will not occur.  Secondly, it means the trust is unlikely to have the manager’s base fee reduced from 0.75% to 0.60% as promised by the current manager.  At this stage we do not know enough about North West to judge the quality of the management.

Only time will tell what North West’s intentions are, but we believe a bid for the management contract is more likely than a takeover.

William Curtayne
Disclosure of interest: Milford is a shareholder of Vital Healthcare through our Funds