LONDON: Aurora Investment Trust plc has announced a proposed merger with Artemis Alpha Trust plc. The boards of both companies have agreed on the heads of terms for this combination, which aims to consolidate the assets of Artemis Alpha with those of Aurora.

The merger, pending approval from the shareholders of both trusts, will be executed through a scheme of reconstruction and winding up of Artemis Alpha under section 110 of the Insolvency Act 1986. This process will involve transferring a portion of Artemis Alpha’s cash, assets, and undertakings to Aurora in exchange for new ordinary shares in Aurora, which will be issued to Artemis Alpha shareholders.

Post-merger, the enlarged Aurora will continue to be managed by Phoenix Asset Management Partners Limited, maintaining its current investment objectives and policies. The Aurora Board will also remain unchanged.

Lucy Walker, Chair of Aurora, commented: “The Aurora Board is delighted to welcome Artemis Alpha Shareholders who will enter into an investment trust with a similar philosophy and portfolio, and the enlarged trust will benefit all shareholders through lower fees and better liquidity.”

Key Highlights of the Proposed Merger:

• Increased Scale and Profile: If no Artemis Alpha shareholders opt for the cash exit, the combined entity will have net assets of approximately £353 million, representing a 64% increase based on the net asset values as of August 29, 2024.
• Enhanced Liquidity: The larger scale of the merged Aurora is expected to improve secondary market liquidity for shareholders of both trusts.
• Reduced Ongoing Charges: The merger is anticipated to lower the ongoing charges ratio by spreading Aurora’s fixed costs over a larger asset base.
• Manager Contribution to Costs: Phoenix Asset Management Partners Limited has committed to making a significant contribution towards the transaction costs, which will help offset the direct costs for Aurora shareholders.
• Shareholder Support: Major shareholders of both trusts have expressed strong support for the merger, with 31.6% of Aurora’s and 31.5% of Artemis Alpha’s issued share capital backing the proposal.
• Overlapping Portfolios: The two trusts have several common stock holdings, which account for 62.5% of Aurora’s and 36.1% of Artemis Alpha’s investment portfolios as of August 29, 2024.
• Name Change: Upon successful implementation of the scheme, Aurora intends to rebrand as Aurora UK Alpha plc.

The proposed merger is subject to regulatory and tax approvals, as well as the approval of the shareholders of both trusts. If successful, this merger will create a larger, more liquid, and cost-efficient investment trust, poised to deliver enhanced value to its shareholders.

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