Aberdeen Equity Income and Shires Income to merge in investment trust deal

LONDON: The boards of Aberdeen Equity Income Trust Plc and Shires Income PLC said on Thursday they have agreed to combine the two investment trusts, creating a larger entity with over £289 million in assets to cut costs and boost liquidity.

The deal will be structured as a scheme of reconstruction of Shires Income under the Insolvency Act 1986, the companies said in a statement. Shires shareholders will receive new shares in the enlarged Aberdeen Equity Income Trust or can elect to sell some or all of their holding for cash.

The combined trust, to be managed by abrdn Fund Managers Limited, will incorporate Shires’ ability to invest in fixed income and preference shares alongside equities, the companies said.

The boards said the merger brings together two trusts with strong performance records and similar objectives, managed by the same team. They expect the deal to create a “more cost-effective company” with a lower ongoing charges ratio.

Based on net assets at Dec. 31, 2025, the combined entity is expected to have assets between £289 million and £320 million, depending on the cash take-up by Shires shareholders.

The ongoing charges ratio for the enlarged company is expected not to exceed 0.78%, compared to Aberdeen Equity Income’s current 0.84% and Shires’ 1.00%, the statement said.

Aberdeen will cover the direct transaction costs, excluding portfolio trading and stamp duty, to avoid net asset value dilution for continuing shareholders, the companies added.

The merger is subject to shareholder votes and regulatory approvals, with documentation to be sent in February 2026 and completion expected by the end of the first quarter.

J.P. Morgan Cazenove advised Aberdeen Equity Income, while Winterflood Securities advised Shires.

Sarika Patel, Chair of Aberdeen Equity Income Trust plc, said: “The Board of Aberdeen Equity Income Trust plc is very pleased to announce the recommended combination with Shires Income PLC, which we believe creates a compelling opportunity for the shareholders of both companies.

Bringing together two high-quality investment trusts with aligned objectives, a shared management team and complementary portfolios, the enlarged Company will benefit from greater scale, improved liquidity and lower costs.

The Board considers that this is a rare proposal in the investment trust sector since the Scheme will be undertaken from a position of strength, where both companies are performing strongly and have share prices which are either trading at, or very close to, a premium to their underlying NAVs.

This transaction strengthens our ability to deliver a progressive dividend policy and attractive long-term returns and represents a clear vote of confidence in the enduring strengths of the investment trust structure.”

Robin Archibald, Chair of Shires Income PLC, said: “By combining two successful UK equity income investment companies in the same management stable, the enlarged Company can offer significant benefits of scale and economies for both sets of shareholders with a competitive investment proposition for above average UK equity income.

This is a constructive initiative designed to enhance and, most importantly, to try to encourage new investors to support a closed-ended investment company that can provide returns not available from open-ended alternatives by using the benefits of the closed-ended structure, including gearing, allocation of costs and use of reserves.”