LONDON: European Assets Trust PLC (“EAT”) and The European Smaller Companies Trust PLC (“ESCT”) have agreed to combine in a deal expected to create one of Europe’s largest small-cap investment trusts, with net assets of approximately £780 million.
The transaction, structured as a scheme of reconstruction under the U.K. Insolvency Act 1986, will allow EAT shareholders to exchange their holdings for shares in ESCT or cash. The combined trust is anticipated to deliver cost savings, improved liquidity and a stronger dividend policy.
Key Benefits for Shareholders
- Enhanced Scale & Liquidity: The merged entity will be the largest in the Association of Investment Companies’ European Smaller Companies sector.
- Stronger Performance: ESCT has outperformed its benchmark over three, five and 10 years, with net asset value (NAV) growth of 194.8% over the past decade, compared to EAT’s 66.1%.
- Reduced Fees: Management fees will drop from 0.69% to 0.50% for assets under £800 million.
- Higher Dividend Target: ESCT will adopt a new policy targeting annual payouts of at least 5% of NAV, paid quarterly.
- Immediate Value Uplift: EAT shareholders will see an estimated 3.2% increase due to ESCT’s narrower discount.
Transaction Details
EAT shareholders can elect to receive new ESCT shares or cash, though cash redemptions will be capped at 15% of shares. Janus Henderson Investors will continue managing the enlarged trust, led by portfolio manager Ollie Beckett.
The deal requires approval from both shareholder groups and is expected to close by late October 2025.
Leadership & Outlook
Stuart Paterson, chairman of EAT, said the combination offers shareholders “access to a larger, more liquid, lower-cost vehicle with a strong long-term track record.”
James Williams, chairman of ESCT, called the deal “the first step toward future growth for the benefit of all shareholders.”
EAT also declared a quarterly dividend of 1.38 pence per share, payable July 31.