The Baillie Gifford China Growth investment trust (BGCG) has introduced a performance-related tender offer for shareholders following an internal review.
If the investment company’s net asset value total return fails to outperform its MSCI China All Shares index in sterling terms, from 29 November 2024 to 30 November 2028, shareholders will be eligible for a conditional tender offer of up to 100% in December 2028.
According to the board, this four-year period will give the trust an “appropriate” amount of time to outperform its benchmark. The conditional tender offer will be priced “close to the prevailing net asset value at the time of repurchase”.
The board added that the conditional tender offer will not affect the trust’s current approach to discount management, with BGCG currently exercising an active liquidity management policy in order to reduce discount volatility.
See also: Asia Dragon proposes merger with Invesco Asia
According to data from the AIC, the trust is trading on a 14% discount to NAV as at 13 November 2024. In terms of share price total return, it has fallen by 43.7% over three years, and by 28.2% over five years. Its sector average has lost 36.5% and gained 3%, respectively, over these periods.
Chair Nick Pink said: “The Board believes the introduction of the conditional tender offer is to the benefit of all shareholders. Over four years shareholders will receive either outperformance relative to the benchmark or an opportunity to redeem 100% of their holding at close to NAV/share.
“For investors in China equities, the board believes the company offers a differentiated growth strategy. The board is committed to using all the benefits of the closed end company structure where they enhance shareholder value, measured using the company’s KPIs.
“The announcement of the conditional tender offer therefore adds to the existing liquidity policy to buy-back shares, the use of prudent gearing, the ability to own private investments and competitive costs, principally via a tiered management fee. Together we believe these features distinguish BGCG from its peers.”
