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CASE STUDY: MUTUAL FUND PROXY | MARCH 2024

EQ Fund Solutions' In-Depth Analysis and Flawless Execution Leads to a Merger of Two MLPs in Record Time

    

    

Highlights

 

  • Two master limited partnerships (MLPs) were merged in record time from mailing, to meeting, to merger completion.

  • EQ conducted multiple shareholder identification reports leading up to the record date to track any buying by activist investors and put together multiple vote projection models.

  • EQ worked closely with the fund company’s management team to ensure the deadline for the merger was met.

   


     

Situation


EQ Fund Solutions was engaged to assist a fund company that was looking to merge two of their master limited partnerships (MLPs) into one. In order to complete the transaction, shareholders of both MLPs needed to be apprised of the plan and reorganization between their two funds. Through public filings and EQ’s proprietary Ownership Intelligence services, it was discovered that there was significant ownership of shares by investors who are known to cause proxy contests, which caused concerns of activism against the merger. This meant that the company would need the support of these investors to continue with their plans as intended.

Pulling off this transaction would then be challenging. In addition, an extra layer of difficulty came into play, as the preliminary filings were tied up in the SEC with many comments, well beyond the usual 30-40 days on an N-14 reorganization. This delay put the company’s goal of soliciting shareholder approval, holding the meeting and merging the funds before the funds’ year end in jeopardy.

    


Solution


EQ’s Ownership Intelligence team worked closely with the company’s management team. EQ advised that the most efficient way for the company to allow for the merger was to proactively communicate with the activist investors in order to gain their support. Well in advance of the transaction announcement, EQ conducted multiple shareholder identification reports leading up to the record date to track any trading activity by the activist investors. Based on these shareholder ID reports, EQ also put together multiple vote projection models that considered what votes would look like with and without activist investor support. These models were the basis for the solicitation strategy, to ensure timely passage of all proposals.  

As a result of the delay at the SEC, EQ also launched a very proactive outbound calling and mailing campaign once they were finally cleared to print and mail. EQ wanted to ensure that the funds’ year end deadline would be met.

Securing the required votes had mostly to do with the arrangement made between the company and activist investor, and being able to mobilize the EQ call center and mail facility to quickly solicit votes from tens of thousands of shareholders.
 


    

Results


Through EQ’s in-depth analysis, shareholder identification, vote projection capabilities and flawless execution of the solution plans, both funds approved the mergers in enough time for the funds’ transfer agent, also EQ, to merge the books and records before the fund’s year end.

   
  

    

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