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Witan Pacific appoints Baillie Gifford and proposes shift to China focus

Witan Pacific WPC

Witan Pacific (WPC) has a entered into an investment management agreement to appoint Baillie Gifford as its new manager.

New China-focused investment policy proposed

WPC is proposing that subject to shareholder approval, its investment objective is changed to produce long term capital growth by investing predominantly in shares of, or depositary receipts representing the shares of, Chinese companies. WPC noted: “Under Baillie Gifford’s management, the portfolio will consist of a diversified portfolio of 40 to 80 securities and up to 20 per cent. of the total assets of the company may be invested in unlisted securities. The company will also be able to employ gearing, which typically would not exceed 20 per cent. of gross asset value at the time of drawdown.”

Tender offer for shareholders wishing to realise part or all of their investment

In order to take into account its commitment announced on 11 February 2019, WPC said that shareholders wishing to realise part or potentially all of their investment in the company will have a chance to do so through a tender offer for up to 40 per cent. of the shares in issue at a one per cent. discount to the prevailing NAV per share.

China seen as a compelling opportunity

Susan Platts-Martin, chair of WPC, had this to say on today’s announcement: “Following an extensive and competitive review of the company’s management arrangements, the board is pleased to appoint Baillie Gifford as the company’s investment manager, subject to certain shareholder approvals. The board believes that China provides a compelling investment opportunity that is currently underrepresented in global portfolios. China’s domestic stock market and economy have grown to become the second largest in the world and we believe that China will be one of the most important markets of the next decade. We are delighted that the company will be able to access Baillie Gifford’s proven experience investing in China given its strong track record in this area. The board believes that the move to a China growth strategy will provide shareholders with a truly differentiated investment proposition that should lead to a tightening of the discount and growth of the company through superior investment returns.”

[We have been saying for ages that there is room for more funds dedicated to the Chinese market, which has the long term potential to overtake that of the US, and this will not be the last fund we see launched to focus on this area. It was also an obvious gap for Baillie Gifford, who have a successful open-ended fund dedicated to the area. Witan Pacific struggled – first as a pan-Asian fund at a time when investors were keener on Asia ex Japan funds, then as a multi-manager fund that found it hard to fire on all cylinders. This should give it a new lease of life. It will be a much racier fund than it has been and investors will need to factor that into their decision about whether to take the cash option.]

WPC: Witan Pacific appoints Baillie Gifford and proposes shift to China focus

4 thoughts on “Witan Pacific appoints Baillie Gifford and proposes shift to China focus”

  1. Don’t Baillie Gifford already also have a successful closed end fund dedicated to the area, namely Pacific Horizon?

    1. Indeed, but China has become so dominant of Asian (and emerging market) indices that many investors want a dedicated fund. I can even foresee a switch at some point from Asia ex Japan mandates to Asia ex China and Japan – but we are some way off that yet.

    1. We don’t know yet. A circular is expected to be published a week today (24 August) which will have all the details and the meeting to approve the changes is expected for 16 September. They have said that if you want to participate in the tender, you have to have been a shareholder on 24 July 2020.

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