Martin Currie Asia Unconstrained falls on its sword – The board of Martin Currie Asia Unconstrained has decided that it sees little prospect of any significant improvement in the key issues affecting the its discount. As a result, the board has concluded that it needs to do something.
The board feels that, because the shareholders voted for the fund to continue in July 2018, they must want to remain exposed to Martin Currie’s Asia Long-Term Unconstrained strategy. They say they have also had shareholder feedback that confirms. Consequently, the board has decided to recommend reconstructing the company (using section 110 of the Insolvency Act 1986), which, if effected, would result in the voluntary liquidation of the company and a tax efficient rollover of its assets into in an open ended vehicle with the same strategy and within the Legg Mason Investment Funds ICVC umbrella. The tangible benefit of this would be an elimination of the discount and enhanced liquidity for investors. The alternative option for shareholders would be a cash exit.
The company will publish detailed proposals in a circular to be sent to shareholders. This would include the terms and conditions of the rollover scheme and a timetable for the necessary general meetings to seek shareholder approval of the proposals.
[QD comment: Martin Currie Asia Unconstrained is a £143m market cap trust, well above the threshold at which most investors would say is viable (excepting the large wealth managers who are net sellers of trusts in any case). The board’s claim that investors like the strategy seems at odds with the discount – which might indicate that there are frustrated sellers. Investors do like Henderson Far East Income and Schroder Oriental Income (for those that are in Asian funds for the yield) and Fidelity Asian Values, Pacific Assets, Pacific Horizon and Schroder Asia Total Return. It is perplexing that the board is not proposing a rollover into one of these funds or a beauty parade to find a manager that investors can get enthused about.]
MCP : Martin Currie Asia Unconstrained falls on its sword