Baillie Gifford takes over £215m Witan in China move

Edinburgh-based investment giant Baillie Gifford is to take over the management of the £215 million Witan Pacific Investment Trust plc and change the fund’s investment objective by investing predominantly in shares of Chinese companies.

The name of the investment trust will be changed to the Baillie Gifford China Growth Trust plc.

Witan Pacific shares rose 6% after the news.

Baillie Gifford manages assets of roughly £260 billion and is the largest manager of UK listed investment trusts and companies by assets, managing 10 investment trusts and one investment company.   

Sophie Earnshaw and Roderick Snell will manage the China Growth Trust portfolio on a day-to-day basis. Earnshaw has been co-manager of the Baillie Gifford China Fund since 2014 and is also a decision maker on the China A Share Fund.

Snell has managed the Baillie Gifford Pacific Fund since 2010 and been deputy manager of Pacific Horizon Investment Trust since September 2013.

Witan Pacific said: “The board of Witan Pacific Investment Trust plc is pleased to announce that, after an extensive review of the company’s management arrangements, it has entered into an investment management agreement to appoint Baillie Gifford & Co Limited as the company’s new AIFM, company secretary and administrator, conditional on shareholder approval.

“It is proposed that, subject to shareholder approval, the company’s investment objective is changed to produce long term capital growth by investing predominantly in shares of, or depositary receipts representing the shares of, Chinese companies.

“Under Baillie Gifford’s management, the portfolio will consist of a diversified portfolio of 40 to 80 securities and up to 20 per cent of the total assets of the company may be invested in unlisted securities.

“The company will also be able to employ gearing, which typically would not exceed 20 per cent of gross asset value at the time of drawdown.”

Witan Pacific said it believes that many shareholders will wish to continue with the company, but “… the board proposes that those shareholders wishing to realise part or potentially all of their investment in the company will have a chance to do so through a tender offer for up to 40 per cent of the shares in issue at a one per cent discount to the prevailing Net Asset Value per share.”

Susan Platts-Martin, chair of Witan Pacific Investment Trust plc, said: “Following an extensive and competitive review of the company’s management arrangements, the board is pleased to appoint Baillie Gifford as the company’s investment manager, subject to certain shareholder approvals.

“The board believes that China provides a compelling investment opportunity that is currently underrepresented in global portfolios.

“China’s domestic stock market and economy have grown to become the second largest in the world and we believe that China will be one of the most important markets of the next decade.

“We are delighted that the company will be able to access Baillie Gifford’s proven experience investing in China given its strong track record in this area.

“The board believes that the move to a China growth strategy will provide shareholders with a truly differentiated investment proposition that should lead to a tightening of the discount and growth of the company through superior investment returns.”

On dividends, Witan Pacific said: “The company’s current investment objective provides shareholders with both capital and income growth.

“The new investment policy will aim to produce long term capital growth only.

“The proposals, if approved by shareholders, will result in returns from the portfolio being generated from capital growth as opposed to income.

“The current level of dividend will therefore not be covered by the future investment income.

“However, in view of the company’s sizeable revenue reserves, the board intends to continue to pay out dividends at the prevailing level of 7.15 pence per share per annum in respect of the current financial year and the next financial year to 31 January 2022, should shareholders approve the proposals.

“This is intended to mitigate the impact on shareholder income as a result of the proposals in the short term.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.