THE independent directors of a Singapore-listed investment fund - Global Investments - are embroiled in a dispute with the company's biggest shareholder over the appointment of a fund manager to run its business.

Its previous fund manager fell victim to the global financial crisis last year. Global Investments announced last month that it wanted to hand over the job to ST Asset Management - a fund management firm owned by Temasek Holdings.

This followed a strategic review of its assets by Standard Chartered Bank, which had been appointed the fund's financial adviser and had reported its findings to the company's independent directors.

The company found itself rudderless after Australian investment bank Babcock & Brown, which sponsored its listing in 2006, collapsed under a mountain of debt as credit tightened up in the aftermath of the failure of US investment bank Lehman Brothers last year.

It is looking for a suitable candidate to replace a unit of Babcock & Brown which is managing its assets. But Babcock & Brown - now under liquidation - is still its biggest shareholder with a 13.8 per cent stake.

On announcing ST Asset Management's proposed appointment, Global Investments said it 'would be a significant step in de-linking the company from the Babcock & Brown group'.

And if the appointment goes through, it also plans to revamp its board and invite Mr Boon Swan Foo, a former chief executive of defence conglomerate ST Engineering, to be its chairman.

Till now, ST Asset Management's appointment had seemed to be smooth sailing, since it had the independent directors' blessings.

But 11/2 weeks ago, the trustee for Babcock & Brown's stake threatened to derail the process by asking for a special shareholders' meeting to remove Global Investments' incumbent manager and to appoint another firm, Australian fund manager Pengana Holdings, instead. No date has yet been fixed for the meeting.

The Straits Times has tried to reach Mr Julian Blackley, Global Investments' manager-appointed director, and the Singapore-based independent directors - Mr Dilhan Sandrasegara, the managing partner of law firm Wong Partnership, and banker Sanjiv Misra - but without success.

An e-mail to independent director Lee Soon Kie, chief executive of factoring firm IFS Capital, was answered with a reply: 'Ask Julian.'

But in the statement which accompanied the request by Babcock & Brown's trustee for the shareholders' meeting, the company had said it 'is reviewing the content of the requisition notice and is seeking advice from its Bermuda legal counsel as to the appropriate next steps'.

One dealer noted that the Babcock & Brown trustee could have been pressing for Pengana's appointment as a prelude to selling the defunct Australian investment bank's 13.8 per cent stake to it.

Little is known of Pengana's plans for Global Investments if it becomes the manager. A check shows it has over A$1 billion (S$1.3 billion) in assets under management, and has offices in Australia, London and Chicago and a small outfit in Singapore.

But another dealer believes that with the revival of the financial markets, Global Investments' assets may be significantly undervalued. And it is not exactly a pushover, as it sits on assets worth over $300 million - on paper.

He said minority holders will have the final say on the appointment as the Babcock & Brown trustee holds only 13.8 per cent: 'This is one instance where minority shareholders should not be apathetic about their rights - whether they want ST Asset Management or Pengana to manage their money.'

Global Investments had been listed as Babcock & Brown Structured Finance Fund in December 2006 at an issue price of $1.06 per share. But with the collapse of Babcock & Brown, it fell to 4.5 cents last December. It was last traded at 19.5 cents on Oct 15.

According to its latest annual report, Global Investments paid out $5.8 million in base management fees in 2007 and $2.8 million for last year. As of Dec 31, it has total assets of $323.4 million. These included $80.2 million in cash, a $39.7 million investment in aircraft leasing, and $94.6 million in various loan and securitisation assets.

engyeow@sph.com.sg