abrdn Smaller Companies Income Trust says that, while it continues to deliver upon its investment objective (providing a high and growing dividend and capital growth from a portfolio invested principally in UK smaller companies and UK fixed income securities) its shares have continued to trade at a material discount to their net asset value for a prolonged period of time. This, and the company’s small scale, has created challenges for liquidity in its shares and will also restrict its ability to grow.
Whilst the board believes that abrdn Smaller Companies Income remains in a position to continue to generate attractive returns for all shareholders, it intends to undertake a strategic review to consider the future of the company. The strategic review will include consideration of a combination with another suitable investment trust, possibly coupled with a cash exit.
The board will continue to update shareholders on the progress of the strategic review, as appropriate. There can be no certainty as to the outcome of the strategic review nor whether any potential transaction would be successfully completed.
[This is good news, we have been saying for some time that there are too many, too small UK smaller companies trusts. The obvious merger candidates from abrdn’s point of view might be abrdn UK Smaller Companies Growth but that is trading on an 11.6% discount, which probably rules it out, or an income fund such as Shires Income, which is trading on a more modest 2.6% discount. Shareholders might prefer a fund trading on a premium. Chelverton UK Dividend Trust has been performing well and still has a small cap bias, it is also currently sub-scale. This could solve both fund’s problems.]
ASCI : abrdn Smaller Companies Income Trust announces strategic review