Interactive Investor

Chance to buy top trust at 6.5% discount

4th May 2016 16:37

Kyle Caldwell from interactive investor

Investors who hold shares in Witan investment trust, one of our sister magazine Money Observer's Rated Funds, will be given the opportunity to buy shares at a discount of 6.5%, on the back of the firm announcing that it has reached an agreement to buy out Aviva's 15.8% stake.

In a statement, the Witan board said it had agreed to repurchase up to 31.6 million of its shares held by Aviva, subject to shareholder approval. That vote will take place on 26 May.

If given the green light by shareholders, Witan will buy the shares at a 6.5% discount.

This was described by the board as "relatively wide", but is only slightly wider than the current discount this morning, which stands at 6%, according to broker Winterflood.

It is, however, more attractive than the one-year average discount of 1%.

"All current and prospective shareholders are hereby receiving advance notice of a significant proportion of the shares being offered for sale at a relatively wide discount," the board says.

"Should any shareholder wish to participate, they will need to contact their broker or other intermediary through whom they deal in the shares.

Witan outsources its portfolio to external fund managers, who invest in different regions"The board believes the removal of a significant shareholder wishing to sell should improve the balance between sellers and buyers in the market, potentially allowing an improvement in the discount level thereafter (although this cannot be assured)."

Witan's performance has improved over the past five years. Its five-year 58% share price return beats the average global investment trust, up 37% over the same time period. The multi-manager trust outsources its portfolio to external fund managers, who invest in different regions.

Simon Elliott, of broker Winterflood, says: "We rate the management team at Witan highly and believe that it has been one of the success stories of the investment trust sector under the stewardship of Andrew Bell.

"In our opinion, the forthcoming placing provides an attractive value opportunity for investors seeking liquidity in the fund, and we can see it trading on a premium again as market conditions improve and retail investors' appetite for equities rebounds."

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.