The boards of Henderson Diversified Income and Henderson High Income have agreed to merge the two investment trusts.
The plan remains subject to approval by shareholders. Should that be granted in a vote held in January 2024, the trusts would then be merged via a scheme of reconstruction.
A circular is set to be distributed to shareholders detailing the terms this December.
According to the boards of the trusts, the combination will bring a number of advantages, including the opportunity for full cash exits, continuity with Janus Henderson, continuity of high income levels and lower costs.
The boards also expect the merger to narrow the discount the trusts trade at. HHI has a record of trading at a tighter discount to its underlying NAV when compared to HDIV; 10.1% versus 4%.
David Smith (pictured) will be the lead portfolio manager of the new single trust, supported by the Janus Henderson global equity income and fixed income teams.
Angus Macpherson, chair of HDIV, said: “Importantly, shareholders will be offered a choice – a full cash exit at close to liquidation value, rollover into HHI, or a combination of both.
“Those shareholders who roll will maintain a similar income profile, managed by the same investment group, but with the advantage of greater scale and liquidity.”
Chair of HHI, Jeremy Rigg, commented: “This combination offers attractive benefits for our existing shareholders and shareholders in HDIV who elect for the rollover option. Supported by the Janus Henderson group, the combination will increase the size of HHI, improve the liquidity and marketability in the company’s shares and help to reduce the ongoing charges ratio by spreading costs across a larger shareholder base, which is in the interests of both existing and new shareholders.”
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