Andrew Bascand, equities manager at AXA's funds management arm, Alliance Capital Management, says his firm took advantage of the fact that Salvus shares had been trading at a 32% discount to net asset value.

AXA paid 65 cents a share and the fund's last published net tangible assets per share on February 24 was 92.33 cents. That 65 cents price is the lowest Salvus has traded at since the fund listed in July 2004 after its $20 million share issue at $1 a share.

"Effectively, you're buying the companies they're investing in at a 32% discount. We've been looking at opportunities of that nature for some time," Bascand says.

"There are many companies Salvus and other fund managers invest in that we wouldn't necessarily invest in ourselves, but if we can invest in them at a big discount ...."

While it may seem unusual for a fund manager to invest in another fund manager's fund, he says AXA has done so on a number of occasions. For example, it has invested in some of the British investment trusts when they've been trading at significant discounts and sold out again when the discounts have narrowed.

Andrew Couch at Salvus Asset Management says AXA is a large institution which does little investment at the small end of the market, Salvus' niche.

"They're using us to gain exposure to small companies." Salvus has other institutional investors including the British-based Universities Superannuation Scheme which holds 7.46%.