Aurora Investment Trust and Artemis Alpha Trust are set to combine after the two boards signed heads of terms on a proposed merger.
If approved by shareholders, the move would see Artemis Alpha wind up and its £121m assets transfer to Aurora. The trust would then be named Aurora UK Alpha.
A cash exit will be available for up to 25% of Artemis Alpha shares.
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In a stock exchange announcement this morning (2 September), the two firms’ boards said that 31.5% of Artemis Alpha shares and 31.6% of Aurora had expressed support for the proposal.
Aurora will continue to be managed by Phoenix Asset Management Partners and lead manager Gary Channon, while its investment objective and policy will remain unchanged.
Kartik Kumar, Artemis Alpha Trust lead manager, has accepted an offer to join Phoenix Asset Management later in the year.
The two trusts have a number of similar positions in their portfolios, with 62.5% of Aurora’s portfolio being held in companies Artemis Alpha are also invested in.
Duncan Budge, chair of Artemis Alpha, said: “After consulting our major shareholders, the board is pleased to propose the combination of Artemis Alpha and Aurora, which will bring together two investment companies that have long shared a high-conviction investment approach to create a larger, more attractive proposition for investors with enhanced secondary market liquidity and a lower cost ratio.”
Lucy Walker, chair of Aurora, added: “The Aurora board is delighted to welcome Artemis Alpha shareholders who will enter into an investment trust with a similar philosophy and portfolio, and the enlarged trust will benefit all shareholders through lower fees and better liquidity.”
