The board of the Henderson Global Trust plans to merge the trust into the Henderson International Income Trust, as it has failed to get sufficient assets.
The board undertook a strategic review of the trust, in a bid to reduce its discount, which has been 10.7 per cent over the past 12 months.
The Global Trust, run by Wouter Volckaert, has also failed to get “sufficient scale to remain relevant to investors in the global sector”. The trust has £155m in assets.
Following the strategic review the board has proposed merging the trust into the Henderson International Income Trust, which is run by Ben Lofthouse.
While HINT only has £99m in total assets, the trust has traded at a premium to net asset value over the past 12 months.
“The board believes that the combination of HGL and HINT would provide HGL shareholders with an investment in a trust with a stronger rating and would create an enlarged entity with sufficient scale to be attractive to a wider pool of investors,” says the board.
After the merger Wouter will remain as part of the global equities team, working on a number of funds, says a spokeswoman from Henderson.
Previously, the board of the Henderson Global Trust had tried to reduce the discount through share buybacks, but this has reduced the size of the company “potentially narrowing the pool of investors that can support HGL,” says the board.
“The board, after consultation with its advisers, has concluded that certain shareholders would prefer access to a global income strategy in the current market environment while others may wish to retain exposure to a global growth strategy. In the light of that, it has examined a number of options which can secure this objective,” says a note from the board.
Christopher Jonas, chairman of HINT, says: “It has long been our ambition to build on the successful performance of HINT by growing the company through equity issuance. Since launch in 2011 we have more than doubled the assets of the company by a combination of good investment performance and share issuance. We very much welcome the opportunity now to take the company to the next level by way of this proposed transaction”.
Over the past three years HINT has delivered a share price return of 30.6 per cent, and a NAV return of 35.5 per cent, compared to the benchmark’s 51 per cent return.
The Henderson Global Trust has delivered a share price return of 22.4 per cent over the past three years, and a NAV return of 26.4 per cent, compared to 39.6 per cent for the benchmark.
A general meeting will be held for shareholder approval of the proposals.