Legal
Investment House Lauds Cayman Islands Legal System After Winning MBO Share Valuation Fight
The investment house has won, it says, a ruling in the Caribbean jurisdiction about what is regarded as the fair value of a company's shares stemming from a recent management buyout, and says the case also underscores benefits of law in the Cayman Islands.
The emerging and frontier markets specialist firm East Capital says it has won a legal battle in the Cayman Islands to determine the fair value of shares held in a Russian oilfield firm, saying the outcome highlights a strength of doing business in the Caribbean jurisdiction.
The case concerned East Capital’s involvement in the firm Integra Group in conjunction with a management buyout of that business in March 2014. A court ruling on 28 August resulted in East Capital “becoming the first investor ever to conclude the full court route to establish fair value according to Cayman Islands Companies Law,” according to a statement from East Capital.
The ruling, issued by Mr Justice Jones, boosted the value of the East Capital funds’ holdings in Integra (including interest) by 24 per cent over the MBO offer price.
Integra was incorporated in the Cayman Islands and listed on the London Stock Exchange; after the MBO was announced, East Capital said the offered price was beneath its fair value, the statement continued.
“As the largest shareholder in Integra not part of the MBO consortium, East Capital believed it was essential under these circumstances to ensure that unit holders in the East Capital funds received a fair value for their holdings in Integra,” it said.
The investment firm took legal action via the Cayman Islands Companies Law, which it said offers shareholders who disagree with the price offered in a merger an opportunity to dissent, and ultimately entails the Cayman Islands Grand Court determining the fair value, should the parties fail to agree a fair price between them.
East Capital actively manages €2.6 billion ($2.92 billion) in public equity, private equity and real estate. It is headquartered in Stockholm, with offices in Dubai, Hong Kong, Luxembourg, Moscow, Oslo and Tallinn.
