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BlackRock Emerging Europe’s liquidation plans announced

BlackRock Emerging Europe announces rollover option

BlackRock Emerging Europe’s liquidation plans announced – on 14th June, the Board of BlackRock Emerging Europe (BEEP) announced that its tender offer had not secured enough money to make continuing running the company viable. Click here to read more on our coverage of that decision.

The Board of BEEP have looked at the options and have come up with a proposal to put to shareholders. The will give shareholders the choice of any combination of:

Same investment management team

The proposals will provide BEEP shareholders with the ability to elect to rollover some or all of their interests into BRFI in order to enable them to maintain some or all of their exposure to a strategy managed by BlackRock’s Emerging Markets team.

Sam Vecht, the co-portfolio manager of BEEP, is also the co-portfolio manager of BRFI, alongside Emily Fletcher.

Lower exposure to Russia

Many of the countries that BEEP invests in, BRFI also invests in. The exception is Russia, to which BEEP has an exposure of approximately 50%.  BRFI has no exposure to Russia. Likewise, BRFI will give exposure to other regions that BEEP does not currently have, such as Central and South America, the Middle East and North Africa (MENA) and Asia.

As BEEP explain in their announcement:

“BRFI is a closed-ended investment trust that seeks to achieve long term capital growth by investing in companies domiciled or listed in, or exercising the predominant part of their economic activity in, less developed countries. These countries are those which are neither part of the MSCI World Index of developed markets nor one of the eight largest countries by market capitalisation in the MSCI Emerging Markets Index as at 1 April 2018 (being Brazil, China, India, Korea, Mexico, Russia, South Africa, and Taiwan).”  

BRFI shares have traded at an average premium to net asset value of 3.18 per cent. over the last 12 months.

Shareholder agreement

The shareholders of both BRFI and BEEP will be asked to approve the arrangement. A circular convening general meetings to seek approval of BEEP shareholders for the proposals is expected to be sent to BEEP shareholders in due course.

Whilst this is all happening, BEEP’s portfolio will remain fully invested according to its investment policy until the proposals have been approved by shareholders at the relevant General Meeting.

Costs

  • The costs incurred by BRFI in connection with the proposals will be deducted from the new C share pool, that will be created for the transition.
  • BlackRock has agreed to meet any costs exceeding 1 per cent. of the value of the C share pool such that the opening NAV of the C shares will be not less than 99 pence per C share.
  • It is expected that the C shares will be converted into ordinary shares in BRFI on a NAV for NAV basis once the C share portfolio has been substantially invested in accordance with BRFI’s investment policy.

BEEP : BlackRock Emerging Europe’s liquidation plans announced

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