Jupiter UK Growth (JUKG) has issued a circular detailing its reconstruction and wind up proposals. This follows on from JUKG’s previous announcements in January that terms had been agreed with Brown Advisory Funds Plc for a rollover into the Sterling Class B Distribution Shares in Brown Advisory Global Leaders Fund, or, alternatively, shareholders could opt for a cash exit. We would recommend that shareholders read the circular in full, but are including details from JUKG’s announcement in relation to the Benefits of the Proposals, Conditions of the Proposals, Brown Advisory Global Leaders Fund and the Interim dividend.
Benefits of the Proposals
The Directors consider that the Proposals should have the following benefits for all Shareholders as compared to their current position, or under a straight liquidation:
- They enable Shareholders to roll over some or all of their investments into BAGL, a global equity fund carefully selected by the Board and which the Board is satisfied has a good track record of delivering outperformance versus its comparator benchmark (FTSE All-World Index Net Return).
- Shareholders who may be subject to UK capital gains tax or corporation tax on chargeable gains should be able to roll over their investments into BAGL and thereby continue to receive investment returns without triggering an immediate liability to UK capital gains tax or corporation tax on chargeable gains.
- BAGL is an open-ended investment vehicle and BAGL Shares can be repurchased/redeemed on any business day on which the New York Stock Exchange is open for trading. Shareholders electing for the Rollover Option will therefore be able to have their investment repurchased/redeemed on request (subject to the terms of the BAF Prospectus) at a price which is close to the then prevailing net asset value per share.
- Shareholders electing for the Cash Option in respect of some or all of their investment will be able to receive cash in the liquidation of the Company. Shareholders should note that, depending on their particular circumstances, this may trigger a chargeable gains tax liability. Please refer to the section headed “United Kingdom Taxation” in Part 5 of the Circular for further details.
- In respect of Shareholders electing for the Rollover Option, BAF has agreed the following:
- BAF has agreed and undertaken to waive the minimum shareholding requirement, minimum initial investment amount requirement and minimum additional investment requirement in respect of Shareholders electing for the Rollover Option and receiving BAGL Shares pursuant to the Scheme.
- The annual management fee charged on Class B shares in BAF is lower than that which is charged on the Class A and Class P shares in BAF (which are the classes typically offered to all investors and primarily to retail investors).
- BAF has also agreed to waive any repurchase charge in its entirety for any Shareholders who elect for the Rollover Option and receive BAGL Shares pursuant to the Scheme.
Please also refer to Part 4 of the Circular which describes in further detail the waivers by BAF of certain requirements (relating to minimum investment) given to Shareholders electing for the Rollover Option and receiving BAGL Shares pursuant to the Scheme.
Conditions of the Proposals
Implementation of the Proposals is conditional upon:
- the passing of the Resolutions to be proposed at the First General Meeting and the Resolution to be proposed at the Second General Meeting, or any adjournment of those meetings, and any conditions of such Resolutions being fulfilled;
- the Financial Conduct Authority agreeing to amend the listing of the Ordinary Shares to reflect their reclassification as Reclassified Shares for the purpose of implementing the Scheme; and
- the Directors resolving to proceed with the Scheme.
If any condition is not satisfied, the Proposals will not become effective, the Scheme will lapse and the Company would not be wound up.
Brown Advisory Global Leaders Fund
BAF is an open-ended UCITS umbrella fund established in Ireland and authorised by the Central Bank of Ireland. BAF is an umbrella fund with segregated liability between sub-funds. This means that the holdings of BAGL are maintained separately under Irish law from the holdings of the other sub-funds of BAF and under Irish law, investments in one sub-fund should not be affected by any claims against any other sub-fund of BAF.
Brown Advisory Global Leaders Fund (BAGL) is one of the sub-funds of BAF. BAGL is a UCITS. BAGL’s investment objective is to achieve long-term capital appreciation by investing primarily in global equities. The portfolio of BAGL consists of c.30-40 companies in any sector or country that the portfolio management team believes are capable of compounding excess economic returns over time. The portfolio management team seeks to identify those companies which are considered high-quality through their five-step, fundamental stock selection process and seeks to invest in them at an attractive valuation. Their philosophy also embraces environmental, social and governance (“ESG”) principles as it is their belief that understanding how a company engages with all its stakeholders is key to understanding value creation. Finally they are focused on making long-term investments, using short-term volatility as an opportunity, with the intention of creating a concentrated portfolio of their high conviction investments from around the world.
As at the Latest Practicable Date, the net assets of BAGL are US$1,971,254,469.53.
The manager of BAGL is Brown Advisory (Ireland) Limited, a member of the Brown Advisory group of companies, and the investment manager of BAGL is Brown Advisory, LLC, a member of the Brown Advisory group of companies. The sub-investment manager of BAGL is Brown Advisory Limited, registered in England under company number 06363486, authorised and regulated by the Financial Conduct Authority (firm reference number 475370), having its registered office at 6 – 10 Bruton Street, London W1J 6PX, United Kingdom.
Brown Advisory is an independent investment management firm established in 1993 as an affiliate of Alex. Brown Inc., an investment bank founded in 1800. In 1998, the current management and investment team led a buyout to establish Brown Advisory as a private, independent investment firm. Brown Advisory Limited was established with the opening of the firm’s London office to support their growing global client base. As of 30 November 2020, Brown Advisory had approximately US$104 billion in client assets from all 50 US States and 40 countries worldwide. The firm has over 700 employees each with an equity interest, representing approximately 70 per cent. ownership in the business (the remaining 30 per cent. is owned by members of the independent board and a small group of private individual investors; no single equity holder owns more than 5 per cent.).
Brown Advisory has a long history of investing, having managed active equity strategies since its inception over 25 years ago. Its “Global Leaders” strategy was launched in 2015.
The BAGL Shares will not be admitted to listing and/or to trading on any authority or stock exchange.
Please note that neither the Board nor the Company takes any responsibility for the contents of the BAF Prospectus, the KIID or the Factsheet.
Interim dividend
The Directors intend to declare an interim dividend in order to ensure that the Company meets the distribution requirements to maintain investment trust status during the period from 1 July 2020 to the Winding-up Date. It is expected that this interim dividend will be paid on 24 March 2021 to Shareholders who are on the Register as at close of business on 5 March 2021 and that the ex dividend date for this interim dividend is expected to be 4 March 2021.