Investor says it put too much faith in Aryzta
Aryzta's biggest shareholder, Cobas Asset Management, said it had placed too much trust in the troubled baked goods company's management.
"We have learned from our mistake already," Cobas portfolio manager Andres Allende told the investment firm's clients in an investment update.
Spanish firm Cobas owns more than 14pc of Aryzta and was opposed to the Swiss-Irish firm's €800m equity-raising plan that was narrowly approved by the firm's shareholders earlier this month at its annual general meeting.
Aryzta has been battling to shore up its business after a bruising few years. Its board, which includes chief executive Kevin Toland and chairman Gary McGann, have launched a multi-year turnaround strategy designed to get the group back on its feet.
"Performance hasn't been stellar this year and part of that relates to our investment in Aryzta," Mr Allende told clients. He said that Cobas undertook research and spent "considerable time and resources to make sure we didn't make a mistake".
"And as our confidence grew Aryzta´s weight in the portfolio also grew," he said.
Mr Allende added: "Still, we made a different kind of mistake - not about the business or the balance sheet. We were trusting too much in management, led by our prior good experience with the chairman." He added: "Then came the fall, which has been antifragile - that is, it didn´t really risk the fund thanks to diversification. And thanks to margin of safety we stand to perhaps recover much of our investment in it (not the cost of opportunity)."
The equity raised from Aryzta shareholders is being used to reduce debt and fund a plan called Project Renew, which aims to deliver annual cost savings of €90m by 2021 at the Cuisine de France owner.
Cobas had claimed prior to the AGM that Aryzta was painting an "unduly grim picture" of its predicament.
Cobas had insisted a €400m capital raise would have been sufficient. However, the Aryzta board said its turnaround plan was in the best interest of all stakeholders. Cobas had also indicated that it would participate in the €800m equity raise if the plan was passed by shareholders.
"We have learned from our mistake already," said Mr Allende. "But clients and family rightly ask us about the Aryzta case, testing our investment process and our behavioural scars.
"And we tell them that we are ready to move on and we will decide from scratch whether to stay in it or rather invest in other alternative options, assessing risk and reward from where we stand today."
Aryzta was unavailable for comment on the Cobas issue.
On Monday, Aryzta shares soared as it posted first-quarter figures that showed stabilising revenue and an increase in organic revenue.