Aberdeen Standard Investments said on Wednesday its £580.9 million Murray Income Trust plc fund has agreed to merge with the £642.2 million Perpetual Income and Growth Investment Trust plc.
The enlarged investment trust — a closed-end fund — will be controlled by the Aberdeen Standard UK Equities team with Charles Luke as lead portfolio manager.
Perpetual Income said: “MUT (Murray Income Trust) is an AIC Dividend Hero, and intends to seek to retain this status, having grown its dividend for 46 consecutive years and currently has a yield of 4.5%.
“The proposed transaction 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.”
Mergers and acquisitions in the investment trust industry are rare.
Perpetual Income added: “Although consolidation rarely results from manager beauty parades, the board was of the view that a combination of the two companies would bring additional benefits to PLI shareholders, by offering exposure to ASI’s UK Equity strategy in a well-managed, and enlarged, investment trust with a highly competitive management fee …
“The company has consulted with a number of its major shareholders who have indicated their support for the transaction …”
Perpetual Income chairman Richard Laing said: “We believe this decision will provide shareholders with strong potential for future capital growth and income generation.
“With very similar investment objectives to deliver growing income and capital growth from mainly UK equities, Murray Income Trust has demonstrated a consistent performance track record in doing both, with its NAV total return outperforming its benchmark FTSE All-Share index on an annualised basis by 8.8%, 3.6%, 2.6% and 1.6% over 1, 3, 5 and 10 years respectively.
“We are confident that the depth and breadth of experience in Charles Luke, the lead portfolio manager of MUT, as well as the wider UK equity team at Aberdeen Standard Investments will continue to deliver for shareholders over the long run.
“There are few mergers of investment trusts, but we believe that this transaction will have great appeal to shareholders of PLI.
“They will transition their interests at net asset value (after deduction of costs and adjusting for dividends), and with Murray Income shares typically trading at a narrower discount to PLI, should bring an immediate uplift …”
Murray Income Trust chairman Neil Rogan said: “We are thrilled that Murray Income was chosen in a highly competitive tender run by the board of Perpetual Income and Growth, which is recognition of the strength of the people, process and performance of our investment management team led by Charles Luke. …
“With a strong management team, an excellent performance track record and an enlarged capital base leading to greater liquidity and lower costs, we can look forward with confidence in meeting our shareholders’ objectives, long past our centenary year in 2023.”
Devan Kaloo, global head of equities at Aberdeen Standard Investments, said: “As managers of Murray Income Trust PLC, we are delighted to have been given this opportunity following such a thorough process by the board of Perpetual Income and Growth Investment Trust.
“This is a clear and welcome endorsement of our overall investment approach and in particular our strong UK equity income franchise.
“Charles has an excellent long-term track record built around a focus on quality.
“Charles and the UK equity team’s due diligence and company research gives us the confidence that we can deliver growth and income for shareholders of the enlarged Trust.”