Key investor could block continuation of BlackRock investment trust

Asset manager City of London Group has threatened that it could oppose continuation of the BlackRock World Mining Trust over its “unreasonably large” discount.

In an open letter to directors of the investment trust, the asset manager warned it would block continuation of  the investment trust at its annual general meeting.

The asset manager took the unusual step of making the letter public to encourage other shareholders to come forward with requests. It had previously written to directors in April 2010 and in July 2011.

The discount is an area where the board “needs to be more assertive”, according to the asset manager.

City of London Group says the discount has averaged at 15% over the past three years and was “unacceptable”, calling on the board to reduce the discount.

“The chairman’s statement in the annual report acknowledges the importance of actively monitoring the discount,” the asset manager says.

“We naturally agree but we are dismayed by the lack of action: monitoring the discount without a plan of action when it becomes unreasonable is pointless.”

The asset manager holds a 7.1% stake in the investment trust on behalf of institutional clients.

The group did congratulate the investment manager for strong returns over three years, but the asset manager says it is “disappointed” that its investment record was not reflected in the share price.

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