(Alliance News) - Troy Income & Growth Trust PLC and STS Global Income & Growth Trust PLC on Tuesday said they have agreed for a merger of the two firms.
Both are managed by Troy Asset Management Ltd. STS Global has a "balanced portfolio constructed from global equities", while Troy Income & Growth Trust "predominantly" backs UK equities.
The firms said the combination, which has yet to be approved by the shareholders of either company, will be implemented through a scheme of reconstruction. Troy Income is to be liquidated and its assets transferred to STS. STS shares will then be issued to Troy Income shareholders. Troy Income shareholders will also be given the option of a 100% cash exit.
Under the deal, the enlarged STS will be able to spread its fixed cost over a larger base, while management fees will also be reduced. The firms noted that it will also increase the diversification of shareholders, and improve create a more liquid fund.
Following the merger, STS will continue to be managed by Troy Asset Management, with James Harries remaining as lead portfolio manager.
Additionally, Troy Asset Management will contribute towards the costs of the proposal at an equal amount to 18 months of management fees, which it said will amount to the equivalent of an 18-month fee waiver for Troy Income & Growth shareholders.
Troy Income & Growth Chair Bridget Guerin said: "The board is pleased to have reached an agreement with the board of STS over the proposed combination of the two companies. The combination will create a larger investment trust that is expected to be more liquid and have reduced overall costs, and will continue to follow Troy's long term, quality focussed, conservative investment management style with a global opportunity set."
STS Chair John Evans commented: "The combined entity will create a larger investment trust with significantly reduced overall costs and expected improved liquidity which will continue to follow Troy's long term, quality focussed, conservative investment management style with a global opportunity set. We believe it is an attractive strategy for those with irreplaceable capital and looking for both income and capital growth."
Troy Income & Growth shares rose 1.4% to 67.36 pence each on Tuesday afternoon in London, while STS Global shares fell 1.5% to 213.70p per share.
By Harvey Dorset, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2023 Alliance News Ltd. All Rights Reserved.