(Alliance News) - Two China-focused investment trusts on Tuesday said they have agreed to combine to create a closed-end investment vehicle in London with GBP1.2 billion in assets.
Fidelity China Special Situations PLC, a FTSE 250 index constituent, said it has agreed to merge with London Main Market-listed abrdn China Investment Co Ltd. The merger will see the smaller trust, abrdn China, placed into voluntary liquidation, with assets and cash transferred to Fidelity China in exchange for new Fidelity China shares.
Shareholders of abrdn China also will be given a cash exit opportunity up to 33% of its total shares. The cash option will be at a 2% discount to formula asset value per share.
Fidelity China's manger, FIL Investment Services (UK) Ltd, part of the US's Fidelity International, will contribute GBP500,000, plus the value of eight months of management fees, toward the costs of the combination of the two investment trusts.
The merger is expected to complete by the end of the first quarter of next year.
The two companies said the combination will improve secondary market liquidity for investors. The profile and marketability of the new FTSE 250-listed entity is expected to be raised by becoming "the flagship UK closed-ended vehicle for investment in China".
Fidelity China shares were down 0.5% at 211.00 pence early Tuesday in London for a GBP994.1 million market capitalisation. abrdn China shares were up 12% at 451.00p for a GBP192.4 million value.
By Tom Waite, Alliance News editor
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Fidelity China Special Situations PLC (FCSS)