Weekly investment trust wrap: Alliance Trust, Witan, Regional REIT, Tritax EuroBox

This is the first in what we intend to be a weekly series of updates on developments at popular investment trusts. We know that trusts are important to Fidelity customers: last month, for example, just one individual share (Legal & General) outsold the most popular trust (Polar Capital Technology) among our ISA investors.

Our new regular updates aim to keep readers informed about trust news that they need to know or may even want or need to act on. Let us know if these articles are helpful or if you would like to suggest any improvements: contact us via Twitter/X at x.com/richardevans10.

Alliance Trust/Witan merger

Last week these two global trusts, both of which employ multiple external fund managers to pick their stocks, said they would merge to form a £5bn giant. Witan’s assets will be absorbed into Alliance Trust and the new fund will be called Alliance Witan. The combined trust will be run in line with Alliance Trust’s existing arrangements, under which the choice of fund managers is delegated to WTW, formerly Willis Towers Watson.

Witan shareholders will have the option to receive cash for some or all of their shares at 97.5% of net asset value (currently if they sold in the market they would have to suffer the prevailing discount of 5.4%). The proportion of their holding that individual shareholders will be able to swap for cash will depend on overall demand for the cash option.

Shareholders in the combined vehicle are expected to benefit from lower annual costs thanks to economies of scale: Alliance Witan’s ‘ongoing’ annual charge is expected to be a little below 0.6%, compared with the current 0.62% for Alliance Trust and 0.76% for Witan.

Merger documents are due to be posted to shareholders by the end of August, with a view to convening general meetings in September to approve the deal. Completion is expected by late September or early October.

• Read our latest update on Alliance Trust

Regional REIT share sale

Regional REIT, which owns offices outside the London area, is to ask shareholders for £111m in exchange for new shares at a discounted price of 10p per share. Shareholders will be able to buy 15 shares for every seven they currently hold. Their broker should be in touch with details and if they decide to take part their instructions will need to be received by 17 July (although some brokers may have an earlier deadline). Shareholders who do not take part risk seeing their holdings substantially diluted.

The trust said that if it did not raise new money it risked being unable to repay a retail bond that matures next month.

Assuming that the share sale is successful, a ‘consolidation’ will follow so that the share price increases 10-fold and the number of shares each holder owns is cut by 90%.

The shares are trading at 13.76p at the time of writing.

More on Regional REIT

Tritax EuroBox

Potential bidders have been given an extra four weeks to make an offer for Tritax EuroBox, which owns logistics warehouses in Europe. The trust said a month ago that one potential bidder, Brookfield Asset Management, was considering an offer, although no actual proposal had been received.

This week it said the takeover watchdog had given Brookfield until 29 July to announce a firm intention to make an offer. Tritax also said it had been ‘in discussions with a number of parties from whom it has received and/or solicited expressions of interest regarding a possible offer’ although it reiterated that ‘there can be no certainty that any firm offer will be made by Brookfield or any other party’.

More on Tritax EuroBox

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing, please read the relevant key information document which contains important information about each investment trust. The shares in these investment trusts are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.