by Dave Baxter, Investors’ Chronicle, January 3, 2024:
Even the last working day before Christmas was far from short of investment trust news. The board of Octopus Renewables Infrastructure (ORIT) announced an intention to merge with its peer Aquila European Renewables (AERI) on the morning of 22 December…
The plan has received a lukewarm response from AERI so far, with the board stressing that it “continues to explore a number of different initiatives” alongside the proposed merger in response to investor concerns. But ORIT’s proposal forms part of a much wider trend: four investment trust mergers crossed the line in 2023.
An additional four mergers were also announced in the year, with tie-ups on the cards, subject to shareholder approval, between Henderson High Income (HHI) and Henderson Diversified Income (HDIV), JPMorgan MidCap (JMF) and JPMorgan UK Smaller Companies (JMI), Troy Income & Growth (TIGT) and STS Global Income & Growth (STS), and Abrdn China (ACIC) and Fidelity China Special Situations (FCSS)…
Size matters
As previously reported, consolidation in the wealth management sector means the professional investors who might buy investment trusts are both fewer in number and much larger in size – meaning they can only back trusts with enough scale to provide decent liquidity…
The right fit
This year’s flurry of activity does leave several trusts looking stronger than before, from Nippon Active Value (NAVF), a Japanese small-cap fund with an activist bent, to Asia Dragon (DGN)…
Not all mergers are meant to be, of course, and the prospect of Octopus Renewables Infrastructure merging with Aquila European Renewables has already divided opinion. Matthew Read, senior analyst at QuotedData, said: “Given their different focuses, we’re yet to be convinced that merging these different strategies into one fund makes sense at the current time.” Investors could have plenty of other tie-ups to discuss in 2024.
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