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M&G High Income rollover into JPMorgan Elect

As M&G High Income nears the maturity date of its zero dividend preference shares (in March 2017), its board has been considering its future. Today they have announced that they intend to put forward proposals for a reconstruction of the company. They’ll publish more detailed proposals early in 2017.

Closed-ended rollover into JPMorgan Elect

Conscious that some shareholders may favour maintaining their investment in a closed-ended structure, the board has agreed heads of terms with JPMorgan Elect’s board for it to act as the closed-ended rollover option in connection with the Proposals.  JPMorgan Elect provides investors access to a number of different investment strategies, including one focused on UK equity income, through a multi-share class structure and the Board believe this will appeal to the company’s shareholders and unitholders.

JPMorgan Elect, which has total net assets of circa GBP290 million (as at 31 October 2016), has three share classes, and quarterly conversion between share classes is permitted.  The investment objectives of the three classes, which the Board considers to be comparable to the Company’s overall investment objective, are set out below:

  • Managed Income – A growing income return with potential for long term capital growth by investing in equities, investment companies and fixed income securities.
  • Managed Growth – Long term capital growth from investing in a range of investment trusts and open-ended funds managed principally by JPMorgan Asset Management.
  • Managed Cash – Preservation of capital with a yield based on short term interest rates by investing in a range of liquidity funds and short dated AAA-rated UK or G7 government securities hedged into sterling.

It is expected that each of JPMorgan Elect’s share classes will be made available as rollover options for the Company’s shareholders.  Each share class is listed separately and traded on the main market of the
London Stock Exchange and JPMorgan Elect’s shareholders are able to switch between the three share classes on a quarterly basis without incurring a liability to UK capital gains tax.

Open-ended options

M&G will make available as rollover options the following open-ended investment companies it manages:

  • M&G Extra Income Fund, which has a high degree of overlap between the investment objectives and the underlying holdings of the Company and benefits from continuity of management as it is managed by the same  portfolio manager, Richard Hughes, who is also responsible for managing the Company’s assets. This fund will be the default option for shareholders in the Company who do not choose one of the other  alternative options;
  • M&G Strategic Corporate Bond Fund; and
  • M&G Dividend Fund.

Cash option

Shareholders can also opt for a cash exit at NAV less costs

Pursuant to the Proposals, which will be subject to approval by the Company’s shareholders, the Company, through a scheme of reconstruction under section 110 of the Insolvency Act 1986, will be wound up voluntarily.

MGHC / MGHI / MGHU / MGHZ / MGHP / JPE / JPEI / JPEC : M&G High Income rollover into JPMorgan Elect

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