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EP Global Opportunities to become a self-managed trust

EP Global Opportunities to become a self-managed trust – Following the review of its strategic direction as announced in its half-year report in June, EP Global Opportunities (EPG) has announced plans to change its management arrangements by becoming a self-managed investment trust. As a result, the board will assume overall control over the investment policy and will have overall responsibility for its activities. It is proposed that the present portfolio manager, Dr Sandy Nairn (pictured), will be appointed as a director and will have responsibility for day-to-day investment management.

The company will seek Financial Conduct Authority and shareholder approval to amend its investment objective and policy which will involve expanding its investment objective of providing shareholders with an attractive real long-term total return. This will include investing globally in undervalued securities by enabling investment also in other financial assets. The board also intends to amend the investment policy to permit investment in a diversified portfolio of equity and equity-linked securities (both listed and unquoted), investments in other investment companies and funds which provide exposure to a wide range of financial asset classes and to allocate a portion of portfolio assets to be managed by one or more specialist investment sub-advisors.

EPG has entered into heads of terms with Franklin Templeton and Dr Nairn in respect of the new management arrangements. It has been agreed that Dr Nairn will continue to work for the Franklin Templeton group and as part of this engagement he will be responsible for a new sub-advisory arrangement which EPG will enter into with Franklin Templeton. It is expected that the sub-advisory arrangement will initially be for 70% of the company’s portfolio. The heads of terms are subject to finalisation of full legal documentation.

Meanwhile, while the board believes that most shareholders will wish to maintain their investments in the company, it recognises that some may wish to realise part, or potentially all, of their shareholding. It has therefore decided to put forward a tender offer for approval by the shareholders at the general meeting. The board intends to undertake consultation with the shareholders on these proposals in the coming weeks and a circular will be published in due course.

[This is an unusual move. Self-managed trusts are vanishingly rare – especially now as Scottish Investment Trust intended to combine with JPMorgan Global Income & Growth. With a market cap of just £101m, EP Global is already on the small side and a decent sized tender will exacerbate that. Finally, while self-managed, EP Global will still be bound up with the same management company and individual manager that it had previously. However, as the fund shrinks, the capacity to cover markets effectively as a self-managed trust could become disproportionately expensive. It makes sense therefore to outsource the management of parts of the portfolio through investment in other funds.]

EPG : EP Global Opportunities to become a self-managed trust

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