Schroder UK Mid Cap (SCF) will shrink by over a third after 34.65% of shares were put up for sale in the tender offer designed to let 19.5% holder Saba Capital exit.
Nevertheless, the £230m investment trust expressed relief that the level of selling was below the 49.87% limit set in May when it announced a deal had been struck with the activist hedge fund which has recently ousted the boards of Edinburgh Worldwide (EWI) and Impax Environmental Markets (IEM) to gain control over those listed funds.
Chair Harry Morley said: “We are pleased that a clear majority of our shareholders have chosen to remain invested in the company, and we now have a stable base from which to grow going forward. We thank all shareholders for their thoughtful engagement and support for the transaction.”
Schroders fund manager Jean Roche added: “We remain focused on delivering long-term value and believe the portfolio is well positioned to capitalise on the compelling investment opportunities in UK mid-cap equities.”
A total of 11.44m shares, representing 34.26% of those in issue at the record date on 21 May and 34.65% at 23 June before yesterday’s shareholder meeting to approve the exit, were validly tendered.
The company will now create a tender pool to sell sufficient assets to buy the tendered shares. The disposals are expected to be complete by 5 August with a tender price and payment date announced soon afterwards.
Our view
James Carthew, head of investment company research at QuotedData, said: “Saba agreed to vote in favour of SCP’s tender and tender all its shares. Yesterday’s announcements suggest that, apart from Saba, holders of just 1.7m shares or just 5% of SCP’s shares bothered to vote at the EGM – that is shocking, if true. As far as the tender goes, about 5m or 15% of SCP shares were tendered by shareholders other than Saba – so people tendered without even voting for it. Nevertheless, on the whole, this is a good result for the trust that gives it some breathing room. It will be the smallest of the UK all companies trusts but I think its long term track record justifies an independent future. Hopefully, we’ll see a UK mid cap revival at some point which will give it a chance to shine.”
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