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Perpetual Income and Growth and Murray Income set to merge

Perpetual Income and Growth (PLI), which served notice to Invesco and Mark Barnett in April, has this morning announced that following a new manager search, the board has agreed a heads of terms for a combination of PLI with Murray Income (MUT).

PLI notes: “MUT is managed by the UK Equities team at Aberdeen Standard Investments (ASI).  The Board, which had been focused on finding the best manager for the Company, was very impressed by the investment strategy and approach put forward by ASI, as well as the strength of the team and its top quartile performance over the last 1, 3, and 5 years. Moreover, the existing scale of MUT and the initiative demonstrated by the MUT board added to the attractions of the proposal. Although consolidation rarely results from manager beauty parades, the board was of the view that a combination of the two companies would bring additional benefits to PLI shareholders, by offering exposure to ASI’s UK Equity strategy in a well-managed, and enlarged, investment trust with a highly competitive management fee.”

MUT, which has a similar investment objective to PLI, aims to provide a high and growing income combined with capital growth through investment in a portfolio principally of UK equities.

This would be a rare merger between investment trusts

Richard Laing, PLI’s chairman said “After a thorough tender process, when a number of excellent proposals were received, the Board of PLI is delighted to recommend to shareholders the combination of PLI and MUT. We believe this decision will provide shareholders with strong potential for future capital growth and income generation. With very similar investment objectives to deliver growing income and capital growth from mainly UK equities, Murray Income Trust has demonstrated a consistent performance track record in doing both, with its NAV total return outperforming its benchmark FTSE All-Share index on an annualised basis by 8.8%, 3.6%, 2.6% and 1.6% over 1, 3, 5 and 10 years respectively. We are confident that the depth and breadth of experience in Charles Luke, the lead portfolio manager of MUT, as well as the wider UK equity team at ASI will continue to deliver for shareholders over the long run. 

“There are few mergers of investment trusts, but we believe that this Transaction will have great appeal to shareholders of PLI.  They will transition their interests at net asset value (after deduction of costs and adjusting for dividends), and with Murray Income shares typically trading at a narrower discount to PLI, should bring an immediate uplift. Our shareholders will become part of a trust that has an excellent track record and share price rating, one of the lowest ongoing charges ratio in the sector at an estimated 0.50% per annum (a significant reduction from PLI’s present 0.73% per annum), and an attractive yield of 4.5% with the accolade of being an AIC Dividend Hero. It will also be one of the largest investment trusts in the UK equity income sector, with the liquidity and positioning that a trust with gross assets well over £1 billion brings.

Reaction from MUT

Neil Rogan, chairman of MUT, commented: “We are thrilled that MUT was chosen in a highly competitive tender run by the board of PLI, which is recognition of the strength of the people, process and performance of our investment management team led by Charles Luke.  This transaction creates an equity income investment trust of significant scale and purpose, benefiting from a low ongoing charges ratio estimated to be 0.50% and offering an attractive investment proposition for investors seeking income and total returns from UK equities.  The board recognises the importance of its AIC Dividend Hero status to shareholders and will continue to seek to provide a growing and sustainable income stream. I and the rest of your board believe that the transaction is compelling for both sets of shareholders and we look forward to your support.  With a strong management team, an excellent performance track record and an enlarged capital base leading to greater liquidity and lower costs, we can look forward with confidence to meeting our shareholders’ objectives long past our centenary year in 2023.”

[We think PLI shareholders will welcome this announcement. We said in June that merging with a UK equity income fund that has a better track record than its own might be the best solution for PLI. A combined market capitalisation of nearly £1bn provides a sense of scale and would rank third in size to City of London and Finsbury Growth & Income.]

PLI/MUT: Perpetual Income and Growth and Murray Income set to merge

1 thought on “Perpetual Income and Growth and Murray Income set to merge”

  1. Sweet I have perpetual. Just bought more. Looks like a great deal. It doesn’t follow that shareholders in MUT will accept

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