AVI Japan Opportunity secures bulk of Fidelity Japan’s assets in their merger; 3i Infrastructure posts good half-year results; high-yielding Henderson Far East Income continues to turn around, its annual report shows; stable mate Henderson Smaller appoints Cassie Herlihy from Gresham House; and HgCapital announces a new software investment.
AVI Japan Opportunity (AJOT), the £230m smaller companies activist fund, will add around £179m to its market value after 68% of shareholders in Fidelity Japan (FJV) decided to roll over into AJOT as part of the agreed merger. Just under a third, or 32%, of FJV shareholders opted for cash.
James Carthew, head of investment company research at QuotedData, said: “68% of Fidelity Japan’s assets rolling into AJOT is a good result and reflects the opportunity on offer in Japan’s smaller company market.”
3i Infrastructure (3IN) follows up its half-year trading statement in September with interims declaring a 6.275p per share dividend in line with the annual targeted 6.3% increase over last year. Total cash income rose to £121m from £103m a year ago with a 7.4% investment return underpinned by a strong performance from TCR, the Belgian airport ground equipment support provider that is its largest asset and which 3i is reportedly looking to sell. Net assets rose to £3.7bn from £3.5bn in March with net asset value (NAV) per share up 21.7p to 407.9p. This puts the shares, up 1.5% to 360p today, on a 12% discount and 3.8% yield.
QuotedData’s James Carthew said: “More good numbers from 3i Infrastructure which provides a great example of the ways in which the investment company industry can support the need for infrastructure investment. Although it is de minimis in the context of 3IN’s portfolio, I was intrigued to see that its Future Biogas investment has an operational unsubsidised biogas plant. That is interesting as Foresight Environmental Infrastructure (FGEN) has a portfolio of anaerobic digestion plants that are valued as though they will cease to operate after the subsidies for those assets run out. Future Biogas is the operator of FGEN’s plants and if it can extend the asset lives, there could be an uplift to FGEN’s NAV.”
Henderson Far East Income (HFEL) has continued its turnaround under Sat Duhra who replaced Mike Kerley as fund manager two years ago, carefully lifting and improving the exposure to China while reducing holdings in Australia. The 10%-yielder achieved an underlying NAV total return for the year to 31 August of 12.7%, behind the FTSE World Asia Pacific ex-Japan index’s 14.1% and the MSCI AC Asia Pacific ex-Japan High Dividend Yield’s 13.9%, but with capital return per share in positive territory at 1.42p after a 3.68p loss last year. Earnings per share fell to 25p from 27.8p after normalisation following an exceptional increase in income last year, just enough to cover 24.9p of dividends, up 1.2% from 24.6p.
The retirement of Henderson Smaller Companies (HSL) fund manager Neil Hermon in September has created an opening for Cassie Herlihy, former co-manager of Gresham House UK Smaller Companies Fund with Ken Wotton, who has joined Janus Henderson to help run the £505m investment trust trailing on an 11% discount. Herlihy will be deputy to Indriatti van Hien who was promoted to lead manager after Hermon stepped down from the trust after 23 years. Herlihy joined Gresham House in 2021 from Citi where she was an investment banking analyst. She holds an MSc in the Psychology of Economic Life from the London School of Economics and a BA in Geography from the University of Cambridge. Chair Penny Freer said: “Cassie has significant experience, a strong track record and an investment approach which is well aligned with that of Indriatti and the wider team.”
HgCapital Trust (HGT) will invest £19m in Diamant Software as part of a larger investment by fund manager Hg in the German accounting provider for mid-cap businesses. Hg, which has 25 years’ experience of the tax and accounting sector, is investing alongside Diamant’s founders, Peter Semmerling and Jan Semmerling, who will remain significant shareholders. After the investment, HgT will have £360m for future deployment, representing 14% of its £2.5bn.
Baker Steel Resources Trust (BSRT), the £77m listed mining fund on a 35% discount, says net asset value rose 1.5% to £120.3m last month with NAV per share at 113p at 31 October. This was mostly driven by increases in the listed share prices of Tungsten West and Blue Moon Metals Inc. The latter announced an agreement to buy the Springer Mill tungsten mine in Nevada.
