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Phoenix’s Aurora Investment Trust has proposed a merger with the Artemis Alpha Trust, a move designed to consolidate their combined assets of approximately £353 million. The merger would bring together the £123.7 million Artemis Alpha Trust and the £198.6 million Aurora Trust into a new entity known as Aurora Alpha Trust. This strategic consolidation aims to create a more substantial and potentially more efficient investment vehicle, according to City AM.
The terms of the proposed merger stipulate that Aurora’s current board and its investment management structure, which is managed by Phoenix, would remain intact. Additionally, the lead manager of Artemis Alpha is set to join Phoenix’s investment team later this year. Shareholders of Artemis Alpha would be issued new shares in the newly formed Aurora Alpha Trust as part of the merger process.
The proposed merger comes in the wake of differing performances between the two trusts. Artemis Alpha Trust has faced a challenging period, recording a -9.6% return over the past three years and trading at a 13.5% discount to its net asset value. On the other hand, Aurora Trust has demonstrated a more favorable performance, with a return exceeding 20% over the same period and a discount of 7.8%.
To support the merger, Phoenix has allocated £0.75 million to cover expenses related to the transaction. This financial commitment is expected to reduce the overall transaction costs for Aurora shareholders. Furthermore, the merger is anticipated to result in lower ongoing charges due to the increased asset base, which could benefit shareholders in the long term.
As of the latest update, 31.5% of shareholders from both trusts have expressed support for the merger. Aurora chair Lucy Walker has voiced enthusiasm about the potential benefits of the consolidation. She highlighted the prospect of reduced fees and improved liquidity for shareholders as key advantages of the merger.
The merger, if completed, would create a larger, potentially more efficient entity with enhanced operational scale and reduced costs. This move reflects a broader trend of consolidation within the investment trust sector, aimed at maximizing efficiency and delivering greater value to shareholders.
