Nicholas Bolton loses first court battle with Magellan to wind up listed global fund

Activist investor Nicholas Bolton has lost a court battle with Magellan to wind up its listed global fund, but will take a new approach to remove the embattled fund manager.

Nicholas Bolton. Picture: David Geraghty

Efforts by Nicholas Bolton to wind up the Magellan Global Fund listed class have hit a ­hurdle after his listed company Keybridge lost a court case late Wednesday against the beleaguered fund manager.

Mr Bolton had the backing of 118 unit holders – accounting for about 1 per cent of the voting ­interest in the closed-end listed class of Magellan Global Fund.

Justice Black found the meeting could not be called under the provision Keybridge had attempted to use, given ­restrictive wording in the constitution. However, he determined that Magellan would need to pay Keybridge’s legal costs.

Mr Bolton says he will now call a meeting using Section 252B to ­instead remove Magellan as the responsible entity as the method to resolve the discount to net asset value.

Keybridge has purchased millions of options in the Magellan Global Fund strategy and had been calling for the options to be converted or wound up ­before they expire in March 2024. Mr Bolton said the case showed Magellan had “effectively pulled the wool over the eyes of MGG holders” because they had been “shoehorned” into a structure that did not allow them the opportunity to wind up the trust.

It comes as Magellan faces its own existential threat as billions of dollars of funds under management walking out the door. Last week chief executive David George announced his exit from the firm which has gone from a $100bn-plus fund manager under Hamish Douglass, before starting a downward spiral to $61.3bn by the time Mr George was appointed, and FUM of only $35bn by the end of September.