LONDON, UK: Asia Dragon Trust plc (DGN), a UK-based investment trust focused on Asia Pacific (ex-Japan) markets, has announced a proposed merger with abrdn New Dawn Investment Trust plc (ABD), another UK-based investment trust with a similar investment objective and strategy.

The merger, which is subject to shareholder and regulatory approvals, will create a larger and more diversified portfolio of Asian equities, with the ability to invest in Australasia as well. The combined trust will have a market capitalisation of over £600 million and will continue to be managed by abrdn Fund Managers Limited (AFML), the investment arm of the global asset manager abrdn plc.

The merger will be implemented through a scheme of reconstruction and winding up of ABD, whereby ABD shareholders will receive either new DGN shares or cash for their existing ABD shares. The cash option is limited to 25 per cent of ABD’s shares in issue and will be offered at a 2 per cent discount to ABD’s net asset value. The default option for ABD shareholders who do not make an election or who make an excess election for cash will be new DGN shares.

The chairman of DGN, James Will, said that the merger will bring significant benefits to both sets of shareholders, such as improved liquidity, lower costs, greater scale and enhanced marketing potential. He also said that the enlarged trust will have the opportunity to join the FTSE250 index in the future, which could attract more investors to the Asian growth story.

The portfolio managers of the enlarged trust will be Pruksa Iamthongthong and James Thom, who are currently co-managers of both DGN and ABD. They said that they are excited about the prospects of the merged trust and that they will continue to seek out high-quality companies with strong growth potential across the Asia Pacific (ex-Japan) region. They added that the inclusion of Australasia in the investment policy will give them more flexibility and access to some attractive opportunities in sectors such as technology, healthcare and consumer discretionary.

Sanctuary Housing Association explores business combination with Johnnie Johnson Housing Trust