JPMorgan Multi-Asset Grwth & Income Proposed combination with JGGI (6814A)

TIDMMATE

RNS Number : 6814A

JPMorgan Multi-Asset Grwth & Income

24 January 2024

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA, ANY MEMBER STATE OF THE EEA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction in which the same would be unlawful. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

24 January 2024

JPMorgan Multi-Asset Growth & Income plc

Legal Entity Identifier: 549300C0UCY8X2QXW762

Proposed combination with JPMorgan Global Growth & Income plc

Introduction

The Board of JPMorgan Multi-Asset Growth & Income plc (the "Company" or "MATE") is pleased to announce that it has signed Heads of Terms with the Board of JPMorgan Global Growth & Income plc ("JGGI") in respect of a proposed combination of the Company and JGGI to be effected by way of a section 110 scheme of reconstruction of MATE (the "Scheme") and issuance of new ordinary shares of JGGI as consideration for the transfer of all of MATE's assets (together with the Scheme, the "Transaction").

MATE shareholders will receive new shares in JGGI which will provide them with exposure to a diversified portfolio of global equities managed by JPMorgan Funds Limited ("JPMorgan") and a company with a strong performance record and a well-established dividend policy.

The Board recognises that the size of the Company limits its appeal to investors. As a consequence, the Board intends to unanimously recommend the Transaction to MATE shareholders, as it believes that the Transaction provides the most attractive option for MATE's shareholders, in particular taking into account the strong performance, improved share rating, significantly greater economies of scale and secondary market liquidity that will result from a shareholding in JGGI.

Summary of the Scheme

The Transaction will be effected by way of a scheme of reconstruction of the Company under section 110 of the Insolvency Act 1986, resulting in the Company's voluntary liquidation and the transfer of all of the Company's assets to JGGI in exchange for the issue of new ordinary shares of JGGI ("New JGGI Shares") to existing MATE shareholders ("MATE Shareholders"). The number of New JGGI Shares issued to MATE Shareholders will be determined on a Formula Asset Value ("FAV") for FAV basis. The FAVs will be calculated based on the net asset value of each of the Company and JGGI on an agreed calculation date.

In accordance with customary practice for such transactions involving investment trusts, the City Code on Takeovers and Mergers is not expected to apply to the Transaction. The Transaction will, amongst other things, be subject to the approval by the shareholders of each of JGGI and MATE, in addition to necessary regulatory and tax approvals.

JPMorgan Global Growth & Income

The investment objective of JGGI is to achieve superior total returns from world stock markets. The investment manager aims to achieve this through investing in a diversified portfolio of approximately 50-90 world stocks in which it has a high degree of conviction, in order to achieve superior total returns and outperform the MSCI All Countries World Index (in sterling terms) over the long-term. JGGI's investment objective and policy will not change in connection with the Transaction. Following the successful completion of the Transaction, the enlarged JGGI will continue to be managed by JPMorgan, with Helge Skibeli, James Cook and Tim Woodhouse as portfolio managers.

Benefits of the Scheme

The Board of Directors of MATE believes that the Scheme has a strong rationale, which includes the following benefits for MATE Shareholders:

-- Strong historic investment performance: Over the year ended 31 December 2023, the NAV total return of JGGI's Ordinary shares was 19.5 per cent. compared to that of MATE's Ordinary shares of 11.1 per cent. Over the five years ended 31 December 2023, the NAV total return of JGGI's Ordinary shares was 112.8 per cent. compared to 73.9 per cent. for the MSCI AC World Index (Sterling).

-- Improved share rating: JGGI's Ordinary share price currently trades at a premium to NAV and has averaged a 1.2 per cent. premium over the 12 months to 31 December 2023 compared to MATE's 3.3 per cent. average discount over the same period.

-- Scale: The enlarged JGGI is expected to have net assets in excess of GBP2.1 billion(1) , solidifying its position as the largest investment trust in the AIC Global Equity Income sector whilst delivering an attractive dividend yield and total return. The scale of the enlarged JGGI should improve secondary market liquidity for MATE Shareholders and result in cost efficiencies.

-- Dividends : JGGI's dividend policy is to make quarterly distributions with the intention to pay dividends totalling at least 4 per cent. of its NAV as at the end of the preceding financial year.

-- Contribution to costs: As described below, JPMorgan has agreed to pay all the direct corporate costs incurred by the Company in connection with the Transaction.

-- Reduced management fee for MATE Shareholders: Following the completion of the Transaction, MATE Shareholders will benefit from significantly lower management fees as part of the enlarged JGGI. The incremental management fee payable by the enlarged JGGI will be 0.30 per cent. per annum (the management fee is tiered with 0.55 per cent. per annum on JGGI's net assets up to GBP750 million, 0.40 per cent. per annum between GBP750 million and GBP1.5 billion and 0.30 per cent. per annum thereafter), resulting in an expected weighted average management fee of 0.42 per cent. per annum on enlarged JGGI net assets.

-- Lower ongoing charges: MATE Shareholders in the enlarged JGGI are expected to benefit from an ongoing expense ratio of 0.5 per cent., considerably lower than the Company's ongoing expense ratio of 1.1 per cent. for the last financial year.

-- Portfolio : Exposure to a diversified portfolio of global companies managed by JPMorgan. Currently there is approximately 50 per cent. overlap between the holdings in the MATE and JGGI portfolios.

-- Track record of consolidating investment trusts: JGGI has an established track record of combining investment trusts. It completed the merger with The Scottish Investment Trust in August 2022 and JPMorgan Elect in December 2022.

Costs of the Transaction

JPMorgan has agreed a contribution in relation to all the direct corporate costs incurred by the Company in respect of the Transaction. Accordingly, these direct costs will not be borne by MATE Shareholders. Details of the cost contribution are set out in more detail below.

Any costs of realignment or realisation of the MATE portfolio prior to the Scheme becoming effective will be borne by the Company.

Any stamp duty, stamp duty reserve tax or other transaction tax, or investment costs incurred by JGGI for the acquisition of the MATE portfolio or the deployment of the cash therein upon receipt shall be borne by the enlarged JGGI, including the London Stock Exchange admission fees.

JPMorgan Cost Contribution

JPMorgan has proposed a contribution equal to the direct corporate costs of the Transaction incurred by both MATE and JGGI ("Cost Contribution"). The Cost Contribution will be provided by means of a fee waiver of JPMorgan's management fee on the enlarged JGGI's NAV following completion of the Scheme. However, the Cost Contribution will be for the benefit of the shareholders of each of MATE and JGGI by means of an adjustment against the direct corporate costs in their respective FAVs.

The aggregate net asset value of the assets to be transferred under the Scheme is currently estimated to be approximately GBP71 million(1) .

Expected timetable and General Meetings

It is intended that the documentation in connection with the Transaction will be posted to MATE Shareholders at the end of February 2024. The Company will need to hold two general meetings to obtain necessary shareholder approvals for the Transaction. It is intended these general meetings will be convened in March 2024.

The latest date for the Scheme to be determined to be unconditional is 31 March 2024, unless extended by mutual agreement of the Company and JGGI.

The Chair of MATE, Sarah MacAulay, commented:

"Your Board has been conscious for some time that MATE's relatively small size reduced its appeal to investors, while prospects for the Company's growth have been limited by difficult market conditions. Unfortunately, size does matter due to the implications for costs and for the liquidity of MATE's shares. The Board believes that the proposed combination with JPMorgan Global Growth & Income plc offers shareholders exposure to a large, liquid company with significantly lower costs and a well-established dividend policy. Furthermore, it offers a degree of continuity, given that approximately 50 per cent. of MATE is currently managed by the same investment team that has an excellent performance record from investing in a globally diversified portfolio."

Notes:

   1.     Based on the published net asset values of JGGI and MATE as at 18 January 2024. 

For further information please contact:

 
 JPMorgan Multi-Asset Growth & Income          Contact via Company Secretary 
  Sarah MacAulay 
 JPMorgan Funds Limited 
  Simon Crinage                                [phone] 
 JPMorgan Funds Limited (Company Secretary)    [phone] 
 
 
 Panmure Gordon (UK) Limited 
  Sapna Shah                                     [phone] 
  Alex Collins                                   [phone] 
  Ashwin Kohli                                   [phone] 
 

Important Information

This announcement contains information that is inside information for the purposes of Article 7 of the UK version of Regulation (EU) No. 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended (the UK Market Abuse Regulation). The person responsible for arranging for the release of this announcement on behalf of JPMorgan Multi-Asset Growth & Income plc is Paul Winship of JPMorgan Funds Limited.

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January 24, 2024 02:00 ET (07:00 GMT)