JP Morgan Global Growth & Income (JGGI) is in talks with JP Morgan Elect (JPE) over a merger that would see the former’s assets under management leap to £1.7bn from its current £1.3bn.
Outlined in an announcement to the London Stock Exchange, the merger is expected to be concluded by the end of the year, pending the approval of shareholders of both trusts. If completed, it will be the second merger JGGI has undertaken this year after taking over Scottish Investment Trust.
The process will result in the liquidation of JPE and the transfer of all of its assets to JGGI.
The board of JGGI said that shareholders of both trusts would benefit from “the greater economies of scale that are expected to result from the enlarged asset base, including greater liquidity in JGGI shares and cost efficiencies”.
Assets from all three JPE share classes will be transitioned into assets in line with JGGI’s investment policy, while managed growth shareholders will receive a single C class share for each share they hold.
The chair of JGGI, Tristan Hillgarth, said: “Building on the success of the company’s combination with the Scottish Investment Trust PLC in August of this year, these proposals will add further scale and cost synergies that will allow both groups of shareholders to benefit from the greater scale of the trust. The company will continue to benefit from the strength and depth of the JP Morgan management team and an investment strategy and process that has delivered strong results for shareholders.”
Stepping away from pure Russian equities
In a separate stock exchange announcement, JPM Russian Securities announced its intention to move away from purely Russian equities as economic sanctions following the invasion of Ukraine show no signs of lifting.
The firm announced a proposal to change its investment approach that would allow the trust to invest in equities in central, eastern and southern Europe (including Russia), the Middle East and Africa. The new investment objective is subject to approval by shareholders at the next general meeting on 23 November.
Due to the rapid imposition of sanctions following the outbreak of war, the trust’s board said it was unable to trade its securities within the Russian equity market, with the value of those securities plummeting.
It said: “The board is conscious of the significant uncertainty regarding the length of time that the current sanctions regime will exist and the significant risk that the current losses in the company would crystallise in the event of a winding up or affect shareholder value in the context of a merger.
“Against this context, given the illiquidity of the company’s existing Russian securities (resulting in a wind up or a merger not being considered to be viable options for the company) and the company’s inability to invest a significant portion of its available funds within the parameters of its existing investment policy, the board, together with the investment manager, is therefore of the view that the company’s investment policy should, subject to shareholder approval, be amended.”
The move comes after JP Morgan AM suspended its Russian equities fund in February following the outbreak of war.
At the end of September, JPM Russian Securities’ portfolio contained 27 investments in Russian companies, valued at £1.9m, or 10% of the overall portfolio.
The trust’s board has also proposed that a name change to JP Morgan Emerging Europe, Middle East & Africa Securities in order to reflect the new strategy.
