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Edinburgh Dragon offers 30% tender offer

Edinburgh Dragon - Returning to form 1

Edinburgh Dragon offers 30% tender offer – Edinburgh Dragon Trust has released its results or the year ended 31 August 2018. The trust’s NAV total return for the year came in a whisker ahead of the return on its benchmark (2.3% versus 2.2%). The shares did a bit better, returning 3.4% as the discount narrowed a little. The dividend for the year is 4p (3.p in 2017).

The chairman says that upping exposure to China was a factor behind the trust’s improved performance  – pointing out that China International Travel, China Conch, Kweichow Moutai, Shanghai International Airport and China Resources Land all feature in the list of best performing stocks over the period. Of course, the setback in markets since the end of the period will have reversed some of those gains.

Continuation vote

One of the resolutions being put to shareholders at this year’s AGM is whether the company should continue as an investment trust. This is a question that the board asks shareholders every three years. Morningstar says that, over the past three years, Edinburgh Dragon has returned 40.7% in NAV terms against 45.1% for the MSCI All Country Asia ex Japan Index. we explored some of the reasons for this in our note – “Returning to form“, published in October 2016.

The board consulted large shareholders in advance of the continuation vote and some of them have asked for a tender offer – to give shareholders a chance to sell their shares at a price close to NAV, if they want to.

Tender offer

The board will, subject to the continuation vote, propose a tender offer for 30% of the company’s issued shares at a discount of 2% to formula asset value (being net asset value less the costs of the tender offer) on the calculation date, which will be at the end of the tender offer process. The tender offer is expected to be conducted, following the necessary shareholder approval, in early 2019. A document setting out the terms of the tender offer will be sent to shareholders shortly in December 2018.

EFM : Edinburgh Dragon offers 30% tender offer

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