Investment firm hikes stake in Argus

Investment firm Equilibria Capital Management has increased its stake in Argus Group to 32%, according to a Bermuda Stock Exchange notice.

Equilibria held 31.56% in Argus last October.

Equilibria also agreed last October to a strategic partnership with Argus rival BF&M, which was subject to a bid by Argus to buy the stock of its single largest shareholder.

Equilibria, the single largest shareholder in Argus, also had its representative resign his seat on the board of Argus.

Under the terms of the agreement, Equilibria, the largest shareholder in Argus, said it would grant BF&M an exclusive option to acquire a 13.7% stake in Argus. BF&M is not obliged to exercise its right under the option but may choose to do so. Additionally, BF&M will invest in a dedicated fund which will hold a 16.3% stake in Argus.

The deal included an agreement whereby Equilibria would acquire BF&M’s headquarters and adjoining building on Pitts Bay Road (110 Pitts Bay Road and 112 Pitts Bay Road) and enter into a long-term lease agreement with BF&M for the buildings. This transaction would enable BF&M to further strengthen its balance sheet whilst allowing the company to continue to serve its clients from its historical headquarters.

Equilibria, headed by Daniel Tafur, also got the right to manage some of BF&M's investments.

Ratings agency AM Best said in October that it was monitoring the situation.

It said then that it did not consider the investment by BF&M into a fund holding a 16.3% share in Argus Group to be of sufficient materiality to warrant rating action.

But it indicated concern over “less than full alignment” between the board and key stakeholders.
It said: “However, the recent announcement by BF&M regarding its strategic partnership with Equilibria Capital Management to engage in a merger defence strategy, in addition to the board’s adoption of a shareholder rights plan in response to Argus’s pending acquisition of a large minority stake in BF&M, continues to imply less-than-full alignment between the board and other key stakeholders."