Two of the UK’s most popular closed-ended investment vehicles, Alliance Trust (ATST) and Witan Investment Trust (WTAN), are to merge to create a £5 billion multi-manager investment vehicle.
The deal, which will create a new trust called “Alliance Witan”, follows a strategic review triggered by the retirement of Witan chief executive Andrew Bell.
Under the terms of the arrangement, Witan will undertake a scheme of reconstruction to roll into Alliance Trust, which has a market value of £3.42 billion. That will come in exchange for the issue of new Alliance Witan shares to existing Witan shareholders.
The newly merged trust will create a rival to FTSE 100 listed F&C Investment Trust (FCIT), which has a current market value of £5.13 billion, and a Morningstar Medalist Rating of Bronze.
Alliance Trust is one of the UK’s most visible investment trusts, and beat its benchmark, the MSCI All Country World Index, in the last financial year. It is currently trading at a -5.64% discount, which means the shares are trading below the net asset value.
The smaller of the two trusts, Witan has a market capitalisation of £1.64 billion and is trading at a -7.83% discount to NAV. Shares in Witan rose nearly 4% on Wednesday morning to 271p.
The “multi-manager” approach used by both trusts is set to continue.
“Since Andrew Bell announced his decision to retire, we have been through an extensive process to identify the best candidate to take on the management of our shareholders’ assets,” Witan chairman Andrew Ross said today.
“The board assessed a number of very strong proposals, including single-manager candidates with impressive track records. However, the Board was unanimous in recommending the combination with Alliance Trust, which allows the continuation of our multi-manager approach at lower fees and in a larger, more liquid, vehicle.”
Witan/Alliance Trust Portfolios Are Different
Alliance Trust and Witan Investment Trust have both previously used multi-manager strategies. Alliance Trust has used Willis Towers Watson as an investment manager, while Witan has a panel of six outsourced investment managers – including both Lindsell Train and Artemis.
Following the merger, Willis Towers Watson will have “overall responsibility” for managing the assets of the combined trust, whose investments will be selected according to a 10-20 “best ideas” approach.
Despite the similar approach, both trusts’ portfolios look distinctly different. Alliance Trust’s top three holdings include “Magnificent Seven” constituents Alphabet (GOOGL), Microsoft (MSFT) and Amazon (AMZN), with