The Scottish Investment Trust (SIT) said it entered a share repurchase agreement to buy back the 11.88% stake in the company held by investment firm Aviva on behalf of Friends Life.
SIT will buy back 11,404,178 shares — worth roughly £87 million at today’s share price — and cancel the shares, reducing the size of SIT.
Shares of Edinburgh-based SIT, which has a stock market value of roughly £735 million, have soared more than 30% over the past year.
“Aviva has agreed to sell all of the Aviva shares at a price per ordinary share representing a discount of 10.75% to the net asset value per ordinary share (NAV) as at close on the business day immediately prior to the date of the repurchase,” said SIT.
“Aviva gained control of a substantial shareholding in the company in November 2015.
“Aviva has not previously been a long term investor in the company and therefore, given the size of Aviva’s shareholding, the board entered into discussions with Aviva to understand whether Aviva would retain its shareholding over the longer term.
“Aviva indicated to the board that it was seeking to sell its entire holding in the company and the implementation of the repurchase would allow Aviva to achieve this.”
The repurchase must be approved by SIT’s independent shareholders at a general meeting.
SIT added: “The board believes that the repurchase is in the best interests of the company and shareholders as a whole.
“There will be an immediate financial benefit that will accrue to ongoing shareholders, as there will be an uplift to the cum income NAV per share (with borrowings at market value) of 1.3%.
“The repurchase will also remove a substantial shareholder who is known to be seeking an exit.”