He said: “Richard and Nick wanted to be aligned with shareholders so they took their performance fee in shares, Jupiter didn’t want to do that and so received cash.
"That performance fee structure was the one originally voted on and accepted by shareholders.
"The key issue is the valuations of the investments were calculated around September 2021, which we now know was the peak of the technology market.
"The new performance fee structure means they have to get the net asset value above £2.53 [per share] in order to be paid."
The current net asset value is £1.34 per share, according to data from the Association of Investment Companies. The net asset value had fallen by around 9 per cent in the subsequent six month period.
While employed by Jupiter, Watts and Williamson had a line manager within the company, but with their own firm, where will the oversight be?
Haining said: “I speak with them every week, and at present the arrangement is they are not permitted to make any new investments.
"If they want to make new investments they will have to be later stage growth companies, that is what the shareholders of the trust want.
"The assets of the trust are valued by an independent committee of people with decades of experience."
The trust has a long-term target to hold a cash buffer of around £50mn, at present this number is £34mn, though it has a stake in FTSE 100 company Wise, and so those shares could, according to Haining, be sold quickly if cash needed to be raised.
Iain Scouller, analyst at Stifel, said: “We remain wary on the risks around the portfolio such as the portfolio concentration and the potential for investments to require further funding, noting the relatively thin amount of cash on the balance sheet at £33mn.
"The realisation of a large investment would be transformational, but for now we retain a hold recommendation."
David.Thorpe@ft.com
