The Aberdeen Frontier Markets investment trust is set to plummet in size as investors sell more than half of its shares in a tender offer amid a change in strategy.
The £123m investment trust yesterday announced that investors had used a recent tender offer to redeem nearly 100 million shares, accounting for 57.57 per cent of shares in issue.
In addition to approving the tender offer, yesterday’s extraordinary general meeting (EGM) also saw investors approve a plan to overhaul the investment strategy of the trust. Rather than the previous strategy of investing in open and closed-ended funds, the trust will now invest directly in frontier market stocks.
The changes come after Aberdeen took over the management of the trust when it bought the previous managers, Advance Emerging Capital, in December 2015. The firm offered investors a chance to sell out through a tender offer in 2016, but subsequently cancelled this after demand for an exit would have left the trust with an unviable amount of assets.
However, despite significant demand for the tender offer at the second call with nearly 60 per cent of its share being redeemed, it appears the trust will survive albeit in a new format. The board said its broker, Numis Securities will look to sell redeemed shares to new investors
Aberdeen has also committed to investing £10m in the trust, as long as that investment does not mean Aberdeen will own more than 20 per cent of the company.
The asset manager's shareholding would be dependent on how many replacement investors can be found by Numis, and the tender price offered to redeeming shareholders.
