UPDATE 1-Shareholder adviser backs rebel investor for Conwert board
* Advisory firm ISS backs Proschofsky for Conwert board
* Says change necessary to lift share price
* Shares up 1.2 percent, hit highest in more than a year (Adds Conwert CEO comment)
By Georgina Prodhan and Angelika Gruber
VIENNA, April 22 (Reuters) - A struggle over the management of Austrian property group Conwert gained fresh momentum as an independent advisory firm backed the candidacy of a dissident shareholder to the board of the company.
Corporate governance advisory firm ISS, whose recommendations can influence the votes of institutional shareholders, said it would recommend investor Alexander Proschofsky for Conwert's board because change was necessary to lift the share price.
Conwert shares were up 1.7 percent at 10.52 euros by 1405 GMT, having risen as high as 10.56 euros - their highest in more than a year.
Proschofsky, who says he owns about 1.5 percent of Conwert, had put himself forward for Conwert's board last week, signaling more upheaval for the property firm whose management he had criticised in the past.
ISS said it would back Proschofsky and his fellow candidate Peter Hohlbein and advised shareholders to reject the two candidates put forward by the company.
Shares in Conwert, which develops, lets and sells residential property in Germany and Austria, were trading at a discount of about a third below the company's net asset value as of Dec. 31, company data showed, since when the stock has risen about 6 percent.
The share price rally was given impetus last week by the company's confirmation that it had received a new offer for its German business, which comprises most of its assets.
Proschofsky is proposing himself and Hohlbein, a German real-estate consultant, instead of the company's candidates, Alexander Schoeller and Martina Postl, whom he says lack industry experience and are too close to 24 percent shareholder Hans Peter Haselsteiner, an Austrian industrialist.
He believes the private interests of influential figures on the administrative board - including Johannes Meran, who resigned as chairman at the end of March and used to be an adviser to Haselsteiner - have distorted Conwert's strategy.
ISS wrote in its report: "Conwert has, even after a transformation programme, significantly underperformed its peers. Conflict of interest and lack of relevant sector experience have weighed on this performance."
The report, dated April 17 and seen by Reuters on Tuesday, continued: "Given the long term issues at the company, we believe that the dissident has proven that some change is warranted at Conwert."
Wilhelm Rasinger, president of the Austrian Shareholder Association - which represents the interests of retail investors - told Reuters he also favoured Proschofsky and Hohlbein. "There's an urgent need to enrich the administrative board with real-estate and Germany experience," he said.
Haselsteiner referred a request for comment to the management of the company.
Chief Executive Clemens Schneider said he had argued for a lawyer to join the board and also thought it made sense to have someone with real-estate financing experience.
He said he had worked for years with insolvency lawyer Schoeller but did not personally know Martina Postl, a venture capitalist with experience in property investment.
"I admit that in the past, before my time, the way things looked was not ideal," he said. "I can only plead for some peace to return and for everyone to pull together."
Conwert, which has been through a succession of personnel and portfolio upheavals in recent years, said last week it had received an offer for its German assets from a group of investors led by a U.S. insurance firm.
The bid was put together by Meran.
Conwert said it was examining the offer but it did not fit with the company's declared strategic direction, which it has said will focus on Austria and Germany.