ABERDEEN Asset Management could suffer yet more outflows if a plan to revamp its Frontier Markets investment trust does not win the backing of shareholders, writes Margaret Taylor.
At the end of last year the board of the trust was forced to rethink its investment strategy after a large number of shareholders applied to cash in their investments as part of a tender offer.
Having abandoned the tender offer because it would have been too damaging to remaining shareholders, the board has now proposed that the trust move from a fund-of-funds approach to one that invests directly in equities. The intention is to continue investing in frontier markets such as Argentina, Kuwait, Morocco and Pakistan.
Shareholders are being asked to approve the change at an extraordinary general meeting on 17 March, when they will also vote on whether the trust should proceed with another tender offer. If the change in strategy is not approved the tender offer will not go ahead and vice versa.
In addition, if so many shareholders want to take part in the tender offer that the board feels that continuing shareholders would suffer it plans to terminate the offer and wind up the trust.
Aberdeen, which has committed to buying £10 million worth of tendered Frontier Markets shares, announced this week that it suffered net outflows across its fund range of £10.5 billion in the final three months of 2016.
The trust, which is managed by Aberdeen’s Andrew Lister, has net assets of £122.7m. Aberdeen acquired the trust as part of its 2015 acquisition of Advance Emerging Capital.
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