LONDON: Henderson European Focus Trust plc (HEFT) and Henderson EuroTrust plc (HNE) have announced their intention to merge, creating a new investment powerhouse: Henderson European Trust plc (the “Combined Trust”).

This merger is poised to establish an enlarged flagship European investment trust, with management helmed by the seasoned European equities team at Janus Henderson Investors.

The proposed merger is set to be executed through a scheme of reconstruction and winding up of HNE, as outlined in section 110 of the Insolvency Act 1986. This will involve the transfer of HNE’s assets to HEFT, which will, in turn, issue new shares. Notably, the City Code on Takeovers and Mergers is not anticipated to affect the merger process.

Both boards have endorsed the merger, with the advisory teams working in tandem to facilitate the process. The merger is contingent upon approval from the shareholders of Henderson European Focus Trust and Henderson EuroTrust. If approved, the Combined Trust is expected to boast net assets of approximately £750 million, based on valuations as of 29 February 2024. Additionally, the Combined Trust may secure a spot in the FTSE 250 Index, given its size and scale.

Shareholders holding 35.4% and 37.6% of HEFT and HNE’s issued share capital, respectively, have already expressed their support for the merger.

The Combined Trust will benefit from the joint expertise of Tom O’Hara and Jamie Ross, the current co-lead and lead portfolio managers of HEFT and HNE. The trust aims to maximize total returns by investing in Europe’s “global champions”—prominent, well-established companies with international operations based in Europe.

With a focus on long-term growth aligned with enduring global trends, the Combined Trust will maintain a concentrated portfolio of stocks, emphasizing substantial, well-managed businesses with sustainable models. The trust’s strategy is to capitalize on Janus Henderson’s insights into Europe’s leading companies, leveraging their potential in the context of global market dynamics.

Henderson European Focus Trust and Henderson EuroTrust have demonstrated impressive net asset value (NAV) total returns over the past decade, with figures standing at 160.54% and 151.94%, respectively. The Combined Trust will continue this trajectory of success, supported by Janus Henderson’s award-winning European equities team, which boasts a robust track record of approximately 1,300 company meetings annually.

The merger is expected to enhance the Combined Trust’s marketability and liquidity, potentially making it the second-largest investment company in the AIC European sector and a candidate for the FTSE 250 Index. The alignment of over 50% of common holdings between HEFT and HNE will minimize the need for portfolio realignment, streamlining the merger process and setting the stage for a new era in European investment trusts.

The Chairs of HEFT and HNE commented: “The Combined Trust brings together two investment trusts with excellent long-term performance and highly regarded portfolio managers. We strongly believe this combination will create a single company which stands to be much more than the sum of its parts: enhanced scale resulting in reduced ongoing charges and improved market liquidity; recognised investment prowess backed by deep resources within the European team at Janus Henderson; structured at no cost of combination to ongoing shareholders.”

Dan Howe, Head of Investment Companies at Janus Henderson commented: “We expect that this flagship investment trust, managed within our award-winning European team, will appeal to investors looking for exposure and performance from ‘global champions’ based in Europe, a region so often overlooked but that is home to many of the world’s biggest, best and most-enduring companies.”

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