(Alliance News) - JPMorgan Mid Cap Investment Trust PLC, or JMF, and JPMorgan UK Smaller Cos Investment Trust PLC, or JMI, on Tuesday said they have signed a heads of terms deal to combine as one company.
The two UK-focused investment trusts said the combination will be carried out via a scheme of reconstruction if approved by shareholders. Under the scheme, part of JMF's assets will be transferred to JMI in return for new shares.
The firms said there will also be an up to 15% cash exit opportunity to enable investors to realise part of their investment.
The companies said the new firm will continue to be managed by JPMorgan Funds Ltd, with Georgina Brittain and Katen Patel as portfolio manager.
They added that the enlarged asset base will expose shareholders to greater economies of scale, including cost efficiencies.
The new company will be named JPMorgan UK Small Cap Growth & Income plc.
JMF Chair John Evans said: "The proposed combination will create a larger and more liquid investment trust with significantly lower overall costs. It will also make full use of the investment trust structure, with the new enhanced dividend policy, providing income as well as the potential for capital growth for its shareholders."
JMI Chair Andrew Impey commented: "Your board believes that there is a strong case for long-term investment in UK smaller companies. The valuations are attractive in absolute and relative terms, the outlook remains favourable, despite some near term challenges, and the Company provides access to investments in a controlled risk environment that individual investors would find difficult to replicate on their own."
JPMorgan UK Smaller shares rose 0.8% to 254.00 pence each on Tuesday afternoon in London, while JPMorgan Mid Cap shares rose 3.8% to 876.36p each.
By Harvey Dorset, Alliance News reporter
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