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Baillie Gifford ‘still has work to do’ to win over European Growth Trust investors

Biotech trusts top performance charts in February

Baillie Gifford ‘still has work to do’ to win over European Growth Trust investors
Oversubscribed tender offer

Investment Week, David Brenchley, 04 February 2020

Baillie Gifford still has a lot of work to do to win over investors in its European Growth Trust, according to analysts, after more than half of its shareholder base said they wanted to sell their shares.

Baillie Gifford took over the trust’s management from Edinburgh Partners in November, appointing its European equities team led by Stephen Paice and Moritz Sitte as portfolio managers.

As part of the move, it offered to re-purchase up to 10%, or around 4m, of its share capital for those investors keen to exit at a discount to net asset value.

The shares will be purchased by broker Peel Hunt on 5 February at around 915p, and either sold in the market or re-purchased by the company to hold in treasury.

Numis Securities’ Priyesh Parmar said the make-up of the trust’s current shareholder register, which includes a number of value-oriented investors, meant the oversubscription was no surprise. He noted that almost half of the share capital was held by value firms Wells Capital, 1607 Capital and City of London.

However, Parmar added: “The large demand for an exit highlights that there remains work to be done by the manager and board.”

Meanwhile, QuotedData’s James Carthew was surprised by the scale of the result. “Baillie Gifford’s managers have been hard at work trying to persuade investors to stick with the trust in its new guise,” he said.

“The trust is trading at a small premium to asset value which must have given them hope that they were winning that argument.”

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