TIDMIIT
RNS Number : 3086V
Independent Investment Trust PLC
09 August 2022
9 August 2022
The Independent Investment Trust plc
Legal Entity Identifier : 213800IYHGJTZJ3MO642
Proposed Combination with Monks Investment Trust plc
Introduction
The Board of The Independent Investment Trust plc (the "Company"
or "IIT") is pleased to announce that it has agreed heads of terms
with the Board of Monks Investment Trust plc ("Monks") in respect
of a future combination with Monks to be effected by way of a
scheme of reconstruction under Section 110 of the Insolvency Act
1986 and a voluntary winding up of the Company (the "Scheme"). IIT
shareholders will be able to elect either to receive new ordinary
shares issued by Monks and / or realise part, or all, of their
holding for cash.
Background to the Scheme
Max Ward, the Company's Managing Director and full-time
portfolio manager, recently informed the Board of IIT that he
wished to retire from his role. Given the impact that Max's
retirement would have on the Company, the Board carefully
considered the various options available and decided that a
combination with Monks offered the greatest benefit to IIT
shareholders.
The Global Alpha team within Baillie Gifford, which took over
the management of Monks in 2015, has a strong long term record, and
the wide diversification of the portfolio, beyond the resources of
IIT, is a feature which the Board of IIT considers attractive
against an uncertain geopolitical background which may prove
persistent. The scale of Monks, with assets of GBP2,495 million at
30 June 2022 and no dominant shareholders, allows for a liquid
market in its shares.
Benefits of the Scheme to IIT Shareholders
The Board believes that the Scheme has a number of benefits for
IIT shareholders:
-- Ability to stay invested in a tax efficient manner: As part
of the Scheme, IIT shareholders will have the option of a rollover
into Monks without triggering capital gains tax.
-- Opportunity for full cash realisation: An unlimited cash exit
option will give shareholders the option to realise all or part of
their holding at a level near to liquidation value should they so
wish.
-- Attractive look-through value for shareholders: Monks's
shares currently trade at a tighter discount to their underlying
net asset value when compared to IIT and thus provide an attractive
look-through value for IIT shareholders.
-- Continuity of investment proposition: Shareholders will be
able to maintain exposure to similar investment objectives but with
a more diversified portfolio.
-- Baillie Gifford cost contribution: Baillie Gifford will offer
a cost contribution by way of a six month fee waiver based on the
quantum of assets rolling over to Monks. This will be for the
benefit of all shareholders of the enlarged Monks.
-- Increase in scale: An enlarged Monks will allow fixed costs
to be spread over a larger cost base, alongside improving liquidity
and aiding marketing.
Further details on the Scheme
The Scheme will be effected by way of a scheme of reconstruction
under Section 110 of the Insolvency Act 1986, under which IIT
shareholders will be able to elect either to receive new ordinary
shares issued by Monks (the "Rollover Option") and / or realise
part, or all, of their holding for cash (the "Cash Option").
The Scheme will be undertaken on a Formula Asset Value to
Formula Asset Value ("FAV") basis. The FAV of IIT (the "IIT FAV")
and the FAV of Monks (the "Monks FAV") for the purposes of the
Scheme will be calculated in accordance with the respective
company's normal accounting policies and take into account their
own respective costs, with the exception of stamp duty and listing
fees which will be paid by the enlarged Monks, and any dividends
declared but not paid. The uplift in FAV delivered by the Cash
Option will be for the benefit of the IIT rollover
shareholders.
IIT shareholders who elect to realise all or part of their
holding in the Company for cash will receive an amount in cash
equal to the IIT FAV per share, less 2 per cent., multiplied by the
number of IIT shares they own. For the avoidance of doubt, there
will be no limit on the number of IIT Shares which may be elected
for the Cash Option.
The Scheme will be subject to approval by the shareholders of
both companies in addition to regulatory and tax approvals. In
accordance with customary practice for such transactions involving
investment trusts, the City Code on Takeovers and Mergers is not
expected to apply to the Scheme. A timetable and further details of
the Scheme will be announced in due course.
The directors of IIT, who own circa 24.3% of the company's
equity, all intend to elect for the Rollover Option to the full
extent of their holdings and will also recommend the resolutions
which will be put to shareholders proposing the Scheme.
The Company will pay a pre-liquidation interim dividend to the
extent required in order to maintain investment trust status.
Overview of Monks
Summary
Monks is a United Kingdom-based investment trust whose
investment objective is to invest across the globe to achieve
capital growth, which takes priority over income and dividends.
This is pursued through applying a patient approach to investment,
principally from a differentiated, actively managed global equity
portfolio containing a diversified range of growth stocks -
companies with above average earnings growth - which Monks expects
to hold for around five years on average. Investments are made on
an unconstrained basis. The portfolio, which includes stocks with a
range of different growth profiles, will typically contain 100+
stocks from around the world and Monks should not be viewed as a
proxy for any index. As at 30 June 2022, Monks had total assets of
GBP2,495 million.
Monks is managed by Baillie Gifford & Co, an independent
fund management group, which has around GBP230 billion under
management and advice.
Following completion of the Scheme, it is intended that the
Monks portfolio will continue to be managed on the same basis as it
is currently. In particular, the Monks investment policy and
investment objective will not be amended in connection with the
Scheme and the portfolio will continue to be managed by Spencer
Adair, supported by Malcolm MacColl and Baillie Gifford's Global
Alpha team.
Management fee and ongoing costs
The annual management fee is 0.45% on the first GBP750 million
of total assets, 0.33% on the next GBP1 billion of total assets and
0.30% on the remaining total assets. The total ongoing charges
ratio for the year to 30 April 2022 was 0.40%, down from 0.43% in
the prior year.
Board Composition
The Board of Monks currently comprises five Directors all of
whom are non-executive. It has been agreed that none of the IIT
Directors will be joining the Monks Board as part of the Scheme
and, accordingly, the Board of Monks will continue to consist of
the five incumbent Directors upon completion of the Scheme.
Expected timetable
It is currently envisaged that a shareholder circular and notice
of the general meeting setting out the details of the Scheme and
seeking shareholder approval for the cash exit and liquidation will
be sent to shareholders in late September 2022. The relevant
general meetings are expected to be held in October 2022.
For further information please
contact:
Independent Investment Trust +44 ( 0) 131 558
plc 9434
Douglas McDougall
+44 (0) 207 742
J.P. Morgan Cazenove 4000
William Simmonds
Rupert Budge
Important Information
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information for the purposes of the Market Abuse Regulation (EU)
No. 596/2014.
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END
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August 09, 2022 02:00 ET (06:00 GMT)
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