International Biotechnology Trust enjoys another premium takeover for one of its companies; there are results from Middlefield Canadian, New City High Yield and Schroders Capital Global Innovation; and Foresight Environmental Infrastructure clears its discontinuation vote.
International Biotechnology Trust (IBT) says 89Bio, a US Nasdaq-listed company accounting for 0.5% of its £230m portfolio, yesterday received a $3.5bn bid from Roche of Switzerland. The takeout price was 80% above its share price on Wednesday and adds 0.4% to net asset value (NAV). IBT shares rose 1.8% to 702.2p from a 12% discount to NAV as fund managers Ailsa Craig and Marek Poszepczynski said this was the 30th portfolio company to have received a bid in five years. “With large pharmaceutical companies facing major patent expiries in the coming years, M&A activity in the biotech sector is likely to remain strong for the foreseeable future, creating further opportunities to drive returns for shareholders,” they said.
Middlefield Canadian Income (MCT) underperformed in the first half of the year with net asset value (NAV) up 2.6% below the 4.3% rise in its S&P/TSX Composite Index benchmark. This was mostly due to an underweight to utilities although holdings in financials, energy and a big overweight in real estate did well. Investors in the £146m investment trust will probably overlook this as the shares returned 13.9% in response to the proposed wind-down and rollover into an active exchange traded fund following pressure from 29% shareholder Saba Capital. This narrowed the discount – or gap – between the share price and NAV to 4.2% from 13.5%.
CQS New City High Yield (NCYF) reported a steady year to 30 June with a total 7% investment return underpinning a 7.4% for shareholders in the £330m, 8.7%-yielding loans and bonds fund. The strength of the pound and a missed coupon from Selecta during a restructuring of the Swiss food technology group saw earnings per share dip 0.17p to 4.43p per share. Cover for dividends that rose marginally from 4.5p to 4.51p also slipped to 98% from 100% last year. Fund manager Ian “Franco” Francis said he had focused the portfolio’s 132 holdings on short-term bonds of just over three years, “where we continue to see considerable opportunities for investment, and which are less susceptible to inflation that remains sticky across many western economies. From a geographical perspective, the UK, Europe and Scandinavia are particularly attractive, and, with the US economy slowing, inflation there is expected to fall.”
Foresight Environmental Infrastructure (FGEN) saw just 6.2% of shareholders vote for discontinuation at its annual general meeting, down from 7.3% last year. A special resolution to amend the company’s articles to change it to a continuation vote was also approved with 99.8% support.
Schroders Capital Global Innovation Trust (INOV), the former Woodford Patient Capital Trust that shareholders put into wind-down earlier this year, achieved a 6.7% investment in the first half of the year. A $400m bid for Araris Biotechnology by Taiho Pharmaceutical was the main factor, ensuring that the life sciences was the best part of its portfolio, gaining 10.4%. Writedowns at Ada Health and Federated Wireless and a 30% share price decline in Autolus Therapeutics offset some of these gains, however. It completed a £37m return of capital of 21.1p per share during the period reducing its market value to £90m with the shares on a 35% discount to net asset value.
