The board of European Opportunities Trust intends to introduce a performance related tender offer. This follows an extensive shareholder consultation exercise ahead of the forthcoming continuation vote to be proposed at the annual general meeting on 15 November 2023.
Proposed conditional tender offer details
If the company’s net asset value total return does not equal or exceed the benchmark total return (MSCI Europe Index total return) over the three-year period beginning 1 June 2023 and ending on 31 May 2026, the conditional tender offer will be held as soon as practicable following the conclusion of the 2026 AGM.
The conditional tender offer, if implemented, will be for 25% of the issued share capital and priced at the prevailing net asset value at the time of repurchase (adjusted for the costs associated with the tender offer) less 2%.
Implementation of the tender will be subject to shareholder approval of the continuation resolutions to be proposed at the 2023 and 2026 AGMs and the relevant resolutions proposing the tender following the 2026 AGM.
Buybacks will continue in the meantime
The board has an active discount management policy, the primary purpose of which is to reduce discount volatility. It seeks to maintain the discount in single digits in normal market conditions. Buying shares at a discount also results in an enhancement to the NAV per share. The introduction of the tender will not change the board’s current approach to discount management.
Despite the share price performance over recent years, the board is confident in the core investment strategy, which is upheld by the trust’s long term track record. The board believes that the investment manager has the potential to provide superior returns over the medium term and encourages all shareholders to support the continuation of the company for a further three years at the forthcoming AGM.
[QD comment (James Carthew): This seems like a sensible idea to me. I have been a longstanding shareholder in European Opportunities, attracted by the manager’s good track record. 2020’s performance problems knocked confidence in the trust and caused the discount to widen. Now the discount is narrowing and the fund’s absolute performance is much improved, although relative to the peer group there is still work to do. The board’s approach – a potential tender three years out and buybacks in the meantime – should help keep the discount under control over that period.]
EOT : European Opportunities proposes conditional tender offer