Derek Pain: Argo fund could be an opportunity full of Eastern promise

No Pain, No Gain

When the stock market behaves irrationally, many investors are tempted to examine alternative ways of safeguarding – even improving – their financial position. Commodities, postage stamps and wines are among the most frequently cited havens. Off-beat shares are usually ignored. Yet they can represent intriguing and potentially rewarding opportunities for anyone who wants to retain the often overlooked dealing convenience provided by a share quote.

My attention has been drawn, by a former stock market reporter of The Independent, to a virtually unknown vehicle called the Argo Real Estate Opportunities Fund, an AIM-traded property investment company with interests in Romania and Ukraine. I am not suggesting all and sundry should rush out and buy the shares. After all, it qualifies as an emerging market player and I have, in the past, expressed doubts about such investments being suitable for small shareholders. And the former communist countries in Eastern Europe have not always proved a happy hunting ground for small-time British investors. In fact, I came a cropper with one such venture. But I suspect adventurous, experienced and well-heeled investors who appreciate the risk-reward equation, would be prepared to have a serious look at what is, in effect, a much smaller, Eastern European version of London-quoted blue chip, Capital Shopping Centres.

The Opportunities Fund, capitalised at £12.4m against CSC's £2.9bn, is currently making City ripples because it is issuing shares in exchange for two more shopping centres to add to the three already in its estate. But it is a complicated, inter-related deal.

A little over 298 million shares, currently priced at 0.04p, are being issued to funds close to Argo Capital Management (Cyprus), which is run by Argo Group, a fund manager started in 2000 and listed on AIM three years ago. Argo Group, through a subsidiary, manages the Opportunities Fund. The deal will lift the Argo Group's interest in the shopping centre business to 72.4 per cent. This holding is expected to be reduced by non-group acquisitions.

The takeover will make the Opportunities Fund the largest edge-of-town shopping centre operator in Romania. An investment road show, due to take place in the next few weeks, will no doubt underline the simple fact that on traditional measurements the shares are seriously undervalued. Not only has the company moved into profit, but conservative estimates suggest the shares are trading well below their true asset value. And there are signs the Romanian and Ukrainian economies, after a rough patch, are improving. Some retailers in its shopping centres have had to be helped out, but there are hopes such concessions will not be needed much longer.

The Opportunities Fund came to AIM in 2006. Top price since then is around 1p. It is one of the funds conducted by Argo Group, an investment manager created by barrister Andreas Rialas who runs the business, specialising in global and alternative investments, with banker Kyriakos Rialas. The pair are significant shareholders in the group which, with its shares at 15.25p, is valued at £10.6m.

The Opportunities Fund is not destined for the no pain, no gain portfolio. It is not the sort of investment that attracts me. But the parent Argo Group could stake a strong claim for membership. After all, it is profitable and dividend-paying, with the shares relatively lowly rated and offering a handsome yield. It is a fund manager with a diversified international spread which makes it a seemingly resilient investment. And the recent record is quite impressive.

Finally, an existing constituent, Avation, has clinched a $152.2m 10-year loan, carrying a fixed 5 per cent interest rate. It forms part of the aircraft leasing group's programme to provide further aircraft to SkyWest, an Australian airline that has fixed up a co-operation deal with another "down under" group, Virgin Australia. The first of the batch was recently delivered.

Like most shares, Avation has lost some height in the past few weeks. The price did hit 120p but, at the time of writing, is 104p, capitalising the group at nearly £41m. The portfolio descended on the shares in January at 83.5p. At the same time it alighted on the Capital Pub Co which, following the takeover strike by brewer Greene King, will soon depart at a handsome profit.

yourmoney@independent.co.uk.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Client Services Manager - Relationship Management - London

    £30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

    Recruitment Genius: Credit Controller / Customer Service

    £18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

    Guru Careers: In-House / Internal Recruiter

    £25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

    Recruitment Genius: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Day In a Page

    Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

    Celebrities call on David Cameron to take more Syrian refugees

    One young mother tells of torture by Assad regime
    The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

    The enemy within

    People who hear voices in their heads are being encouraged to talk back
    'In Auschwitz you got used to anything'

    'In Auschwitz you got used to anything'

    Survivors of the Nazi concentration camp remember its horror, 70 years on
    Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

    Autumn/winter menswear 2015

    The uniforms that make up modern life come to the fore
    'I'm gay, and plan to fight military homophobia'

    'I'm gay, and plan to fight military homophobia'

    Army general planning to come out
    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
    America: Land of the free, home of the political dynasty

    America: Land of the free, home of the political dynasty

    These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
    A graphic history of US civil rights – in comic book form

    A graphic history of US civil rights – in comic book form

    A veteran of the Fifties campaigns is inspiring a new generation of activists
    Winston Churchill: the enigma of a British hero

    Winston Churchill: the enigma of a British hero

    A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
    Growing mussels: Precious freshwater shellfish are thriving in a unique green project

    Growing mussels

    Precious freshwater shellfish are thriving in a unique green project