by Val Cipriani, Investors Chronicle, October 21, 2024:
Packing up the house always takes longer than you think. For investment trusts that have started the winding-up process, clearing the portfolio can be long and complicated, especially when illiquid assets need to be offloaded.
Earlier this month, beleaguered infrastructure trust Digital 9 Infrastructure (DGI9), which is in the process of winding down, appointed InfraRed Capital Partners as its new manager, raising eyebrows among commentators. For the first three years, the manager will receive a fixed fee, which significantly drops after that period. James Carthew, head of investment company research at QuotedData, said that the fee structure implies that selling the assets could take that long..
Negotiating asset sales can be more difficult when a trust is winding up, because the market knows that it is a forced seller. Greenwood argued that the decision to enter a managed run-off is having “unintended and unhelpful consequences”..
Carthew noted that a longer sale process is not always the worst thing, particularly if selling quickly means getting a worse price. “If you’re going to sell something at a 20 per cent discount just so you can give it back to me a year early, then to my mind, you’ve destroyed value,” he said.
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