Shareholders in an AIM-listed property investment vehicle are threatening a revolt over a restructuring plan that massively dilutes their interests and effectively cedes control to a wealthy Indian family.

Investors led by Laxey Partners, the activist investor, have described as shocking and ill-conceived a plan to restructure Hirco, which listed on AIM in 2006 and raised more than £380 million to invest in residential property in India.

Laxey wrote to other shareholders urging them to join it in voting against the plan, which involves injecting a loss-making development vehicle of the Hiranandani family into Hirco and handing the family a stake of up to 50.6 per cent. As part of the proposals, shareholders will lose their preferential claim on £350.8 million of shares that pay an annual dividend of 12 per cent.

Laxey, with a stake of 10 per cent, has complained that the proposal, circulated to investors just before Christmas, was being pushed through too fast, leaving shareholders little say.

A special shareholder meeting to approve the restructuring has been convened in Mumbai (previously known as Bombay) for January 16. Hirco will begin roadshows to investors early next week, by which time many investors will have had to tell the custodians of their shares how to vote, the hedge fund said.

“No valuations for the loss-making developer, Hirco Developments, have been provided, only accounts that show it has lost money every year and has required a cash injection every year from Hiranandani,” Laxey wrote in the letter, a copy of which has been passed to The Times. “These proposals have been announced over the Christmas period with an to be held in the new year.

“Clearly this has disadvantaged many shareholders in terms of being able to both consider the proposals and take all necessary actions ... to exercise their votes. We do not believe that this is acceptable behaviour.” Other shareholders in Hirco include Standard Life, which holds 13.5 per cent, and QVT, an American hedge fund, with an undisclosed stake thought to be around 6 per cent. It is understood that Alpine, a specialist property investment firm, is also an investor.

Standard Life and QVT declined to comment. Alpine could not be reached. A spokeswoman for Hirco did not return calls seeking comment.

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