Closed-end Fund Times: November 11-17

Some clarity for Fidelity China Special Situations shareholders as Bolton commits to stay, while Gartmore European’s board tries to prevent the fund's discount from widening amid the troubles

Jackie Beard, FCSI, 17 November, 2010 | 10:01AM
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Baronsmead AIM VCT (BAV) is looking to broaden its investment remit and become a generalist VCT, rather than the service sector specialist it is now. This proposal is accompanied by a planned offer for subscription, to raise up to £20 million. A General Meeting will be held on 14 December at which shareholders will be asked to vote on these proposals.

Chinese private equity firm China Growth Opps (CGOP) has struggled with its agreed sale of Wan Wei Oil & Gas Technology Group, first announced in its annual accounts dated 31 March. The first of three equal instalments fell due in September but payment has not been received. The company will thus not be proceeding with the sale.

Dunedin Income and Growth (DIG), managed by Aberdeen, is proposing to change its investment policy to allow it to invest 20% of gross assets in overseas companies. This will be put to the vote by shareholders at an EGM on 7 December. We don’t see this as controversial as OEICs already have this ability; this move will put the trust on a better comparative playing field with those peers. Manager Jeremy Whitley is head of the UK and pan-European team, having moved across from the Global Equity team at Aberdeen in 2009, so in our view he has the necessary skills and resources at his disposal to potentially make good use of this 20%.

Eastern European Trust (EST) is planning a tender offer for up to 7.5% of issued ordinary share capital at close of business 24 January 2011, at a discount of 2% to formula asset value (which is NAV less tender offer costs).

Anthony Bolton, manager of Fidelity China Special Situations (FCSS), has committed to running the fund until April 2013, some 12 months more than his original indication. We welcome this clarification and note this may have increased the attraction of the fund to institutions at launch had this three-year commitment been evident. That aside, shareholders can take comfort in knowing there will be consistency at the helm for the next 17 months.

It’s a change of investment manager at Fidelity again. This time it’s Fidelity European Values (FEV), which is being taken over by Sam Morse on 1 January 2011. He replaces Sudipto Banerji, who took over Fidelity Funds Global Opportunities from outgoing Ilario di Bon in October this year. As a member of the global equity team, Banerji will be concentrating fully on this wider mandate. Morse has been at the helm of the Fidelity European OEIC since the start of this year and that fund carries a Morningstar Superior rating.

Gartmore European (GEO) has been actively buying back its shares in the market to stop the discount from widening. The board is seeking approval to renew the buy-back facility ahead of the next AGM in late January 2011 as it is likely to be exhausted before this. The board is also conducting a strategic review regarding the future management of the fund.

Henderson Financial Opps (HFO) has confirmed a general meeting will be held on 6 December, at which shareholders will be asked to vote on the proposed reconstruction and liquidation of the company. This was first mentioned in a previous edition of CEF Times. Shareholders can choose to take cash or to roll their holding into the Henderson Global Financial Opportunities OEIC. Unusually, the OEIC is cheaper than the investment company and shareholders opting to switch will see a significant reduction in expenses; the closed-end fund, at £16 million has a TER of 2.39% whereas the £88 million OEIC is lower at 1.86%.

HSBC Infrastructure (HICL) had its EGM on 10 November, at which shareholders granted the board the power to allot up to 150 million C shares, with such powers expiring on 31 March 2011. The company will also be changing its name to HICL Infrastructure Company Limited. Under the placing, open offer and offer for subscription, the company plans to raise up to £110 million through the issuance of 110 million C shares at 100 pence per share. They expect the C shares to list on 15 December and convert into ordinary shares in January 2011.

Last month, Infrastructure India (IIP) announced its plans to move its main listing from the LSE to AIM, for both its ordinary shares and warrants. This became effective 16 November.

Following the successful continuation vote last month, Jupiter Dividend & Growth (JDT) has issued further ZDP Bonus shares to those shareholders who wished to remain as investors. Those who elected to receive cash will be entitled to 90.0 pence per share.

The boards of Matrix Income & Growth VCT (MIX), Matrix Income & Growth 4 VCT (MIG4) and Income & Growth VCT (IGV) have announced the launch of a joint offer for subscription for new ordinary shares in each company, to raise up to £21 million. The offer will close on 30 April 2011, unless it becomes fully subscribed before this. Subscriptions will be divided equally among the three companies.

Trading was suspended in Metro Baltic Horizon (MET) on 11 November 2010 while an investigation gets underway into potential inconsistencies in the company’s financial arrangements. At the time of suspension, the shares traded at a discount of more than 64% to NAV.

Russian property company Mirland Development Corp (MLD) has raised approximately $18 million through its issuance of NIS 66.08 million D series bonds to Israeli investors. These will be redeemed in 4 equal tranches, on 30 November each year from 2014 to 2017.

Murray International (MYIB), managed by Aberdeen, has issued bonus B shares, in respect of its second interim dividend of 6.8 pence per share. Certificates were issued on 15 November.

Nordic Land (NLD) is still struggling to wind up its portfolio in full. The sale of the remaining property in Sicklaon has been delayed once again as Lehman Brothers International Europe (the security agent) cannot locate the mortgage certificate. The sale has been postponed once again, this time to 24 November, but there is no guarantee the certificate will have been located within the next two weeks.

Northern Venture Trust (NVT) has published a prospectus to issue up to 20 million ordinary shares of 25 pence each, subject to a maximum amount being raised of £20 million (before costs).

Pacific Alliance Asia Opps (PAX) has announced the results of its tender offer, which closed on 11 November. Approximately 4.87% of the company’s share capital will be repurchased under the scheme.

Redefine International (RDF) has confirmed it’s in talks with Wichford (WICH) which may or may not lead to the two investment companies merging. Redefine holds 21.7% of Wichford’s share capital.

The winding up of Tapestry (TIC), the global fund of hedge funds, continues. Shareholders originally voted to wind up the company in September 2009 and since then the manager has been working to liquidate the assets. The company will be returning £2.9 million by way of compulsory share redemption on 30 November. This will be on a pro-rata basis. The company has now given notice to its investment manager and expects to put the company into liquidation in February 2011; by this time, the assets are expected to be valued at less than £10 million.

Franklin Templeton has at last made a statement confirming that the Turkish regulator is investigating claims of market manipulation by Mark Mobius, manager of Templeton Emerging Markets (TEM). This was first reported at the end of October.

Witan (WTAN) has appointed Veritas to run an £80million global equity mandate on its behalf. This follows a shift in asset allocation out of North America and Japan. The Veritas Global Focus OEIC carries a Morningstar Superior rating.

Director Appointments
Avarae Global Coins (AVR) – Clement Hadrian Chambers
Pacific Alliance Asia Opps (PAX) – John Alexander

Director Resignations/Retirements
Wichford (WICH) – Wolf Cesman

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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