Murray Income Trust publishes prospectus for new ordinary shares

Murray Income Trust publishes prospectus for new ordinary shares

Charles Luke, head portfolio manager

The board of £580.9 million Murray Income Trust plc, a fund managed by Aberdeen Standard Investments, has today published a prospectus in relation to the issue of new Ordinary Shares in the company.

The board has also published a Circular to shareholders regarding combining its assets with those of £642.2m Perpetual Income and Growth Investment Trust plc (PLI).

PLI has also published a circular to its shareholders today.

The proposed combination was first announced on 29 July following a comprehensive manager search conducted by the Board of PLI. The combination, if approved by each company’s shareholders at general meetings in November 2020 and the requisite consents obtained by each company’s noteholders, will be implemented through a scheme of reconstruction pursuant to section 110 of the Insolvency Act 1986.

This will result in the voluntary liquidation of PLI and the rollover of its assets into the company in exchange for the issue of new MUT shares to PLI shareholders, with PLI shareholders offered the option of a cash exit for up to 20% of PLI shares in issue.

MUT, which has a similar investment objective to PLI, aims to provide a high and growing income combined with capital growth through investment in a portfolio principally of UK equities. 

MUT is an AIC Dividend Hero, and intends to seek to retain this status, having grown its dividend for 47 consecutive years and currently has a yield of 4.5%.  The proposed combination will result in MUT being one of the largest investment trusts in the UK Equity Income sector, with gross assets in excess of £1 billion.

The MUT board and the board of PLI believe that the proposals should prove attractive for PLI Shareholders, offering an investment in a five-star Morninstar rated investment trust that combined has significant scale, a strong investment track record, a low ongoing charges ratio and which historically has traded at a narrower discount to NAV than PLI and has AIC dividend hero status. The MUT Board understands that the PLI Directors intend to roll over their entire beneficial holdings in PLI into MUT.

The  MUT Board believes that the Proposals have the following benefits for Shareholders:

  • Shareholders of the enlarged company will immediately benefit from an enlarged capital base which will result in a significant reduction of the weighted annual management fee to an estimated 0.38% per annum
  • it will result in a reduction of the estimated pro forma ongoing charges ratio of the Company to 0.5% per annum the increase in the size of the company should mean that the Ordinary Shares have enhanced liquidity in the secondary market and with gross assets expected to be in excess of £1bn,  the company should have an enhanced profile becoming one of the largest investment trusts in the UK Equity Income sector.

To be clear the Proposals do not involve merging the existing investment portfolio of PLI with that of MUT. The MUT Board understands that an exercise is being undertaken by Aberdeen Standard Investments (ASI) to substantially re-align the investment portfolio of PLI with that of ASI’s target portfolio for the Company as enlarged by the Proposals. The MUT Board understands this will enable the PLI portfolio to be combined with the MUT’s portfolio under the Scheme without further material change.

The enlarged company will continue to benefit from the extensive resource and experience within ASI, with Charles Luke as lead portfolio manager supported by the UK Equities team. The investment strategy, which will not change, has delivered annualised NAV total returns of 5.6% over the five years ending 30 June 2020, representing annualised outperformance of 2.6% against the FTSE All-Share Index. 

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