Empiric Student Property agrees to takeover by Unite; Riverstone Energy sets “adjustment payments” to its fund manager ahead of next week’s wind-down vote; and JPMorgan American and JPMorgan Claverhouse issue half-year results.
Unite (UTG) is to buy Empiric Student Property (ESP) after the two companies agreed a recommended cash and share offer in talks that began in June. Unite will pay 0.085 of its shares and 32p in cash for each Empiric in a £634m transaction that values Empiric at 94.2p per share priced at a 3.7% discount to net tangible assets. Stifel analysts said this was 1.7% less than the implied price based on the previous indicative offer terms. Empiric shareholders will own 10% of the enlarged group which will have a £10.5bn combined portfolio with around 75,000 beds, 92% located in Russell Group cities. The acquisition is expected to complete in the second quarter of next year. Interim results from Empiric showed a 2.2% total investment return in the first six months of the year with net asset value per share of 120.2p at 30 June.
Riverstone Energy (RSE) says fund manager Riverstone has agreed to a reduction in its annual fee from 1.5% to 1%, the elimination of its performance fee and change to its termination payment ahead of a shareholder vote to approve a managed wind-down on 22 August. Instead of a termination fee, Riverstone will receive “adjustment payments” of 7.5% of cash and listed holdings when they are sold. These amendments do not require shareholder approval but are conditional on the wind-down being approved next week. If approved shareholders should receive proceeds from 14% of the portfolio including cash by the end of this year with a further 69% returned by 31 March next year. The $86m in private holdings will take longer to sell. Net asset value rose 2.8% to $15.13 per share in the second quarter, helped by a more than doubling in the shares of renewable battery storage developer Solid Power.
JPMorgan American (JAM) underperformed in the “rollercoaster” markets of the first half of the year with a total loss on net assets of 4.6% compared to the 3% decline in sterling in the S&P 500 index. Shares in the £1.9bn investment trust price dropped 8.7% as their discount to net asset value, currently 3.7%, widened. The company says in the six years since its manager adopted a “higher-conviction, best ideas approach” in June 2019, JAM has beaten the benchmark by 20.4 percentage points, providing an underlying total investment return of 145.6%, compared with the S&P’s 125.2%. The interim dividend is held at 2.75p per share. Chair Robert Talbut said: “Despite some initial optimism following the new US administration’s economic policy announcements, concerns over potential trade conflicts only added to market uncertainty, which peaked in early April. Despite these challenges, some companies managed to report positive earnings growth, which helped to lift markets back to near record levels at the end of the period.” Fund managers Felise Agranoff, Jack Caffrey, Eric Ghernati and Graham Spence said: “We are optimistic about the prospects for US equities for the rest of this year and beyond. Market expectations have improved in recent months, with investors no longer focused on worst-case scenarios.”
JPMorgan Claverhouse (JCH) has notched up its fourth 12-month period of outperformance in five years after the £439m UK equity income trust made a 13.5% investment return in the first half of the year compared with the 9.1% total return from the FTSE All-Share index. The shares provided a total of 14.6% including a first quarter dividend of 8.4p per share, up from 8.25p, as the “dividend hero” looks forward to declaring a 53rd consecutive increase in the annual payout this year. The board has been using revenue reserves of £13.2m to support the dividend and said it welcomed efforts by the fund managers to enhance income generation and to restore full dividend cover in the next few years. The managers Anthony Lynch, Callum Abbot and Katen Patel said markets had focused on geopolitical and tariff risks but as these had waned they had concentrated on hard economic data and “underlying operating momentum and valuations of the companies in which we invest.” They added: “‘With valuations of domestically exposed equities remaining low versus history, we are finding many interesting opportunities in businesses where we are confident that strong operating momentum will be more than sufficient to offset any broader adverse macroeconomic developments.”
RTW Biotech Opportunities‘ (RTW) investments rose 7.8% in July with net asset value per share of $1.83 at 31 July, ahead of the Nasdaq Biotech index which gained 5.5% as increased M&A in the sector offset increased US political scrutiny. RTW was boosted by Novartis considering a bid for Avidity Biosciences sending its shares over 29% higher to account for 8.7% of NAV. Kailera, an unquoted holding, also released positive phase 3 China trials on its weight-loss treatment.
Seed Innovations (SEED) has launched a 45% tender offer to return £1.91m to shareholders who do not want to stay with the former life sciences fund which had its proposed switch to robotics and artificial intelligence approved by shareholders at its annual general meeting yesterday. The £5m AIM-listed company will pay 2.2p per share, a 12.8% premium to the price on 17 July before its new strategy and plans to offer a tender offer were announced. Ed McDermott and Alfredo Pascual have stepped down as directors to make way for the reappointment of financier Jim Mellon as chair and Denham Eke as non-executive director.
GRIT Investment Trust (GRIT), the suspended mining fund chaired by former Geiger Counter fund manager Richard Lockwood, has agreed a reverse takeover with Namibian oil and gas explorer Nabirm Global. In connection with this, the company has raised £250,000 through the issue of zero coupon notes that will convert into ordinary shares at a 25% discount after the shares return from suspension after the deal completes.
NewRiver REIT (NRR) says Growthpoint Properties sold all of its 14.2% stake in the £50.5m placing to institutional investors at 75p per share announced yesterday.
