The £663m Asia Dragon Trust and £215m Invesco Asia trust have today (28 Oct) proposed a merger that would boost their combined assets under management to nearly £900m, promoting it to the FTSE 250 index.
After transferring Asia Dragon’s assets into the Invesco portfolio, the newly combined trust will be renamed Invesco Asia Dragon.
It concludes the strategic review Asia Dragon launched in May after earlier attempts to rectify its discount had failed. Asia Dragon merged with abrdn’s New Dawn trust in November last year, but its shares are still trading 11.8% below its net asset value.
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In addition to lifting its discount, the new merger aims to lower its management fees, bringing the ongoing charges figure to blow 0.70%.
Neil Rogan, chairman of Invesco Asia, said: “For our own shareholders, apart from the lower fees and greater liquidity, it brings the scale to add to our existing buy ratings that will spur future growth.
“Our proposed discount management policy is bold, and provides the opportunity for us to break free from the persistent discounts and locked registers from which so many Asian and Emerging Markets trusts have suffered.”
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Asia Dragon was down 13.4% over the past three years, whereas the Invesco Asia made a positive return of 2.8%, beating its MSCI Asia ex Japan benchmark by 3.7 percentage points.
Fiona Yang and Ian Hargreaves, co-managers of Invesco Asia, added: “This comes at an exciting moment to invest in Asia, with valuation disparities across the region offering abundant opportunities for the active investor.
“We are delighted that the strength of our investment proposition has helped to secure this opportunity for the Company, and we are confident in our ability to continue to secure the attractive long-term investment returns that we have delivered for Invesco Asia shareholders so far.”
