Abrdn Smaller Company Income Trust has launched a strategic review to “consider the future of the company”, citing problems caused by its persistently wide discount, and small size.
In an announcement on the London Stock Exchange, the £63.5m trust said these factors limited its ability to grow over time and generate liquidity in its shares.
The trust traded at a discount of around 6% at the end of 2021, but since then it has tightened to above 8% only once, according to its December 2022 factsheet. Hargreaves Lansdown has the trust trading at an average discount of 15.7% over the last 12 months.
Since the market opened today (13 February), shares have rallied 13% to 274p, but the price is still down 19% over the last 12 months, and 4% over the last five years. With Hargreaves Lansdown estimating the trust’s net asset value to be 306p, it is currently trading at a discount of nearly 20%.
The trust, which is managed by Abby Glennie and Amanda Yeaman, lagged its benchmark, the Numis Smaller Companies ex Investment Trusts Index, by more than 15 percentage points in 2022.
The planned review will consider a merger with another suitable investment trust, possibly coupled with a cash exit. Though the board emphasised its belief that the trust remained in a position to generate attractive returns for all shareholders, the review is hardly reflective of such confidence.
The board plans to update shareholders on the review’s progress as appropriate, though it added that there can be no certainty regarding its outcome, nor whether any potential transaction would be successfully completed.
