Makes sense: Year of the investment trust merger continues with two more
Last updated: 11:10 28 Nov 2023 EST, First published: 10:33 28 Nov 2023 EST
2023 is proving to be the year of investment trust mergers, with two more announced today that are the fourth for trust managed by Abrdn PLC (LSE:ABDN) analysts said "make sense".
This morning, the boards of Fidelity China (FCSS) and abrdn China (ACIC) agreed merger terms, as did Troy Income & Growth and STS Global Income & Growth Trust.
This China-focused pair is one of those managed by Abrdn's fund management arm.
Others completed last month included another Abrdn-managed trust, abrdn Japan Investment Trust, being rolled into Nippon Active Value, which also absorbed a third, Atlantis Japan Growth.
The same month, abrdn New Dawn Investment Trust was rolled up by Asia Dragon Trust, while a proposed merger of Abrdn Smaller Companies Investment Trust (ASCI) and Shires Income was proposed.
There has also been a proposal agreed for Henderson High Income to absorb Henderson Diversified Income.
Another Abrdn-managed trust, UK Commercial Property REIT was in talks to merge with Picton Property Income Limited, but after pressure from its largest shareholder, decided to walk away.
It has become "the year of the merger", analysts at JPMorgan Cazenove said, counting eight announcements this year.
Today's transactions "make sense, and are thus to be welcomed, as they result in larger ongoing lower cost vehicles while providing at least some cash exit for the outgoing fund’s shareholders".
The analysts noted that Abrdn has been "the main participant" in merger transactions this year, with this being its fourth, with two of these where Abrdn is managing the ongoing vehicle.
It has been a year of more than the usual drama in the trust sector, with mergers, strategic reviews and failed continuation votes coming not quite thick and fast but maybe in fits and starts.
Most mergers have been agreed by boards where the trust's shares are trading at large discounts and performance has been sub-optimal, with many shares falling to record lows and the sizes of trusts making the economics of continuation less appealing.
