Schiehallion (MNTN), the £890m Baillie Gifford growth capital fund, cleared its path for a main market listing tomorrow with 98% of shareholder votes in favour of changes to its articles of association and the issue of restricted voting “B”-shares. Proxy vote adviser ISS had questioned the new share class on corporate governance grounds, but a clarification by the company last week seems to have reassured investors. The Guernsey investment company’s move to a main listing could see it join a FTSE index and improve the visibility of shares standing on a 30% discount.
AVI Japan Opportunity Trust (AJOT), the £407m smaller companies activist boosted by an influx of £184m from last month’s merger with Fidelity Japan, has launched a 100% tender offer under the policy it adopted last year to allow shareholders an annual exit at close to net asset value. The offer will allow shareholders on the register at 6pm tomorrow to sell some or all of their shares at a 2% discount, if they wish. Shareholders are not obliged to tender their shares and the board and the fund manager will not do so. The announcement came as poorly-performing rival Baillie Gifford Shin Nippon (BGS) brought forward a 15% tender and offered a full exit in 2031 if returns didn’t improve.
James Carthew, head of investment company research at QuotedData, said: “AVI Japan Opportunity Trust has built an encouraging record of trading at a sub-5% discount for many years now. That reflects its impressive performance relative to the Japanese small-cap market as a whole – it leads the peer group over the past 12 months, too. Recent stock market wobbles are a factor of adjusting to a new government and a spat with China. I doubt, therefore, that there will be much take up of the tender offer.”
Aberdeen Equity Income (AEI) demonstrated why shares in the £192m investment trust are trading close to par, or net asset value, with strong annual results showing the UK equity income portfolio achieved a 21.8% total underlying investment return in the year to 30 September. That underpinned a 25.7% total shareholder return as the previous 3% discount disappeared with both “significantly ahead” of the FTSE All-Share’s 16.2%. Chair Sarika Patel said the UK stock market “defied expectations” and fund manager Thomas Moore had navigated the “shifting conditions” well, with the trust benefiting from big rises in tobacco companies, house builders and energy providers while avoiding healthcare. Net revenue earnings rose by 2.1% to £11.24m, supporting a 1.6% rise in earnings per share to 23.43p. A fourth interim dividend of 5.9p per share was declared, taking the total for the year to 23p per share, up 0.4% on 22.9p last year, making it a 25th consecutive year of growth. With revenue reserves of 15.68p per share and distributable capital reserves of 171.25p per share, the 5.9%-yielder is confident of paying at least 23.1p per share in the coming financial year.
Lowland (LWI), the £341m UK equity income trust managed by James Henderson and Laura Foll at Janus Henderson, has also done well, with the “multi-cap” portfolio delivering a second year of good returns. The pair oversaw a total underlying return of 20.8% in the year to 30 September, following a 16.3% gain in the previous year, with shareholders receiving 24.4% as the discount narrowed. This beat the FTSE All-Share’s 16.2% and the 13.3% average share price return in the AIC UK Equity Income sector. The trust’s top stocks were HSBC, Barclays and Standard Chartered banks with smaller AIM-listed companies also doing well with two takeovers. A final dividend of 1.70p per share takes the full-year payout to 6.625p, up 3.1% on last year, fully covered by earnings per share of 6.73p, up from 6.29p.
Baillie Gifford European Growth (BGEU) has got off to a bad start in its four-year review process that will determine whether it must provide a 100% tender offer in late 2028. In the 12 months to 30 September, Baillie Gifford fund managers Stephen Paice and Chris Davies delivered a total underlying return of 5.5% that trailed the 15.5% total return of the FTSE Europe ex-UK index. However, the second half of the year saw 12.6% growth in net asset value that was one percentage point ahead of the benchmark’s 11.6%. The total shareholder return over the year was just behind the index at 14.5%, reflecting the share price discount to NAV tightening from 15.7% to 8.6%. The presence of activist hedge fund Saba Capital with a 5% stake and share buybacks of £26.9m, 7.7% of share capital, also helped improve the rating. Having previously seen returns weighed down by private companies, the portfolio generated all its gains from unquoted holdings, of which there are six accounting for 15.5% of net assets, up from 6.4% in five unlisted stocks a year ago. Bending Spoons, the Italian mobile phone app developer, was the standout performer rising 258% to become the trust’s biggest position at 8.7%, worth £35.3m.
