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(Alliance News) - European Investment Trust PLC on Thursday outlined sweeping changes to the company which would see it oust its current investment manager, alter its policy and change its name.
The trust has given notice to oust Edinburgh Partners AIFM Ltd as its investment manager, and is instead appointing Baillie Gifford & Co.
European Investment is hoping to buck a trend which has seen its performance lag behind the FTSE All-World Europe ex UK Index since the appointment of Edinburgh Partners in February 2010.
The trust explained: "In addition, it has lagged the MSCI Europe ex UK Value Index, which more closely reflects Edinburgh Partners' value investment style, over three and five years. Further, the company's share price has experienced a persistent and wide discount to its net asset value per share, notwithstanding the use of share buybacks."
Baillie Gifford, European Investment said, has a track record in achieving capital growth from European equities.
European Investment added: "The investment policy will be amended, with Baillie Gifford realigning the portfolio to invest in European growth companies, with typically between 30 to 50 stocks in the portfolio (up to a maximum of 60 positions) and with a minimum market capitalisation of approximately EUR500 million."
The trust added that over time, the portfolio will eventually include unlisted investments, up to a maximum value of 10% of its total investment.
Upon the Baillie Gifford appointment being effective, European Investment will change its name to Baillie Gifford European Growth Trust PLC.
European Investment Chair Michael MacPhee said: "Baillie Gifford offers a compelling investment process with a proven record of long-term returns, a successful team well-aligned with shareholders and a breadth and depth of supporting in-house resources.
"We feel this gives us the best combination of factors to deliver an attractive and distinctive investment proposition, improve liquidity, lower the discount and do the best job we can for existing and future shareholders."
Stephen Paice and Moritz Sitte will join the trust, co-managing the European Investment portfolio should the changes receive shareholder approval. Paice is head of Baillie Gifford's European Equity Team, where Sitte is also an investment manager.
Going the other way however is Sue Inglis, who will step down from the European Investment board, owing to her position as senior independent director of Baillie Gifford US Growth Trust PLC.
The sweeping changes will require shareholder approval at the trust's annual general meeting on January 23, 2020.
Also requiring shareholder approval is a tender offer the company wishes to propose.
European Investment said: "In connection with the appointment of Baillie Gifford the company will propose a tender offer for 10% of its ordinary shares in issue at that time and at a 2.0% discount to the prevailing cum income net asset value per ordinary share."
Dividends will also change, European Investment said, after it declares a final payout for the year ended September 30.
The firm said: "It is expected that the company's policy will be to pay dividends annually and only to the extent needed for the company to maintain its investment trust status."
Shares in European Investment were 4.6% higher at 836.61 pence each in London on Thursday afternoon.
By Eric Cunha; ericcunha@alliancenews.com
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