Barings Emerging EMEA Opportunities (BEMO) has passed the continuation vote it called this month when back tracking on a commitment to hold a 25% tender offer.

However, the £94m emerging markets investment trust will have to make peace with one of its largest shareholders after just over 33% of shares in yesterday’s general meeting in London voted against the 23-year-old fund continuing. Just over 62% of shares voted in total meaning 20.5% of all BEMO shares were cast against the company.

“While the resolution passed, it received a significant number of votes against, the majority of which were attributable to a single shareholder,” it said.

Stock market filings show City of London Investment Management holds 25% and West Yorkshire Pension Fund 16.6%.

This morning the shares shed some of their gains since the 2 October announcement of the poll, dropping 2.1% to 785p. At yesterday’s close, BEMO stood on a 10.7% discount to net asset value (NAV). They have rallied nearly 50% in the past year and have returned a total of 80% over three years including dividends, ahead of the Global Emerging Markets sector average of 62.4%.

The shares currently yield over 2%. In the 2 October statement, responding to the company’s strong performance, BEMO committed to paying a progressively rising dividend in future and said it would no longer be bound by a previous policy of only paying up to 1% of NAV from capital each year to support the payout.

It also pledged to hold an annual continuation vote and a 100% tender offer in 2028, allowing shareholders to sell all their shares close to their asset value if it does not outperform its benchmark in the next three years.

This was designed to placate shareholders after the board decided not to honour a commitment to a 25% exit made five years ago if the stock had traded at an average discount of more than 12%, which it had. Justifying the move, BEMO said it would not be in shareholders’ interests as it would reduce liquidity in the shares and increase the burden of costs on the company.

Our view

James Carthew, head of investment company research at QuotedData, said: “I’m pleased to see that Barings Emerging EMEA Opportunities passed its continuation vote. I think that co-manager Adnan El-Araby made a good case for investing in this area when he appeared on our show on 12 September. However, just over 20% of BEMO’s shares were voted against continuation, which means that the trust and the manager still have more work to do on this front.”