Doceo Fund Monitor

The Fund Monitor

Artemis Alpha and Aurora to merge; Balanced Commercial Property to be acquired by Starwood; Tritax EuroBox to be taken over by Segro; while abrdn UK Smaller Companies Growth to hike dividend by an inflation-busting 9.1%.

Frank Buhagiar

Aurora and Artemis Alpha to Combine

Aurora (ARR) and Artemis Alpha (ATS) are set to become the latest two investment trusts to join forces in the interests of gaining scale. As per ARR’s press release of 02 September 2024, the two funds have agreed to merge with Aurora to be the continuing vehicle. ATS shareholders will be offered a cash option for up to 25% of their shareholding, subject to a 2% discount and an illiquidity discount of 20% on unquoted investments. The tie-up already has the support of shareholders holding 31.6% of ARR and 31.5% of ATS (31.5%). If all goes ahead, the fund will be renamed Aurora UK Alpha.

Liberum: “We think this is a smart combination of portfolios with significant overlap that should benefit from the greater scale it will achieve. We think the combination would be likely to deliver the increased liquidity noted in the deal drivers, with good potential for a higher share price rating too.”

Balanced Commercial Property Agrees Takeover

Balanced Commercial Property (BCPT) to be acquired by private investment firm Starwood Capital Group in a recommended cash offer of 96p per BCPT share. That’s a 21.5% premium to the undisturbed trading price of 79p before the commencement of the strategic review in April. It’s also an 8.7% discount to BCPT’s last reported (unaudited) NAV per share of 105.1p as at 30 June 2024.

BCPT Chairman, Paul Marcuse, “Over the course of the Strategic Review, we have undertaken an open consultation process with shareholders. We note that a significant proportion of the share register expressed to us a clear preference for a liquidity event, either via a sale or a managed wind-down.” Well, shareholders certainly got their liquidity event.

Tritax EuroBox Recommends All Share Offer

Tritax EuroBox (EBOX), as with BCPT above, clearly got the memo, announcing on the very same day that it too had agreed to a takeover, this time by Segro (SGRO). Unlike with BCPT, the deal is to be paid for in SGRO shares not cash – for each EBOX share held, shareholders will receive 0.0765 New SGRO Shares. EBOX shareholders will also receive a 1.05 pence per share dividend. Based on the SGRO closing share price of 880.0 pence as at 3 September 2024, the transaction values each EBOX share at 68.4 pence. That’s a 27% premium to EBOX’s undisturbed share price of 53.8 pence as at 31 May 2024 and a 14% discount to EBOX’s last reported IFRS NAV and EPRA NDV per share of 93.9 cents as at 31 March 2024.

Numis: “The offer is being recommended by the Board; however the absence of significant irrevocable undertakings beyond the Board (0.08% of share cap) does leave the door open for another party to potentially submit a higher counter offer, including Brookfield who currently have an existing PUSU deadline of 26 September.” In other words, watch this space.

Dividend Watch

Finally, after the excitement of the above three deals, some news from the more sedate world of dividends. abrdn UK Smaller Companies Growth (AUSC) is increasing its full-year dividend to 12p per share, 9.1% ahead of 2023’s payout. That’s inflation-busting with room to spare. Who said dividends were more sedate.