In another contraction for the investment company sector, Diverse Income (DIVI), the £278m UK equity income trust run by Premier Miton fund managers Gervais Williams and Martin Turner, will liquidate and offer shareholders a 100% cash exit and rollover into their open-ended Premier Miton UK Multi Cap Income fund.

As reported by QuotedData earlier this month, the company said in its half-year results that it was considering this option as a solution to its chronic share price discount, which an annual redemption policy had failed to correct despite shrinking the listed fund by £224m over three years.

The company, which launched 15 year ago, will be wound up in a scheme of reconstruction under section 110 of the Insolvency Act 1986. Subject to shareholder approval, this will take place in May or June. A circular with all the details will be sent to shareholders shortly.

Chair Andrew Bell said: “The board retains a high degree of confidence in Gervais Williams and Martin Turner’s ability to manage UK small and mid-cap stocks in a strategy which remains attractive to many shareholders. However, the board acknowledges that the size of the company has reduced substantially following a period of high redemption requests and is therefore proposing the scheme, which will provide shareholders with an opportunity to retain exposure to a similar strategy with the same managers through the rollover option.”

Our view

James Carthew, head of investment company research at QuotedData, said: “Diverse Income has delivered a 35% uplift in its NAV over the past year as investors have started to wake up to the undervaluation of the UK market. However, there is much more to go for on this front. Throwing in the towel now seems perverse. I’d also repeat my usual point that I’d prefer to see this money stay in the investment company sector.”

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