Ashoka India Equity Investment Trust Plc Regulatory News (AIE)

1 July 2022

LEI: 213800KX5ZS1NGAR2J89

Ashoka India Equity Investment Trust plc

(the "Company")

Proposed Amendment to Investment Policy, Posting of Circular and Notice of General Meeting

The Company announces that it has today published a circular (the "Circular") containing details of a proposed amendment to the Company's investment policy and notice of a general meeting to be held on 29 July 2022.

The Board, together with the Company's Investment Manager and Investment Adviser, are proposing to amend the Company's investment policy to reflect the expectation that the Company's portfolio will comprise approximately 50 to 100 investments (as opposed to approximately 25 to 50 investments as currently stated) and to clarify that the portfolio may contain a lower or greater number of holdings at any time (the "Proposal").

The text of the Chairman's letter, including the rationale for the Proposal, together with the expected timetable, have been extracted from the Circular without material amendment and are set out in the Appendix below.

The Circular also includes a notice of general meeting of the Company to be held at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH on 29 July 2022 at 11.30 a.m. (the "General Meeting").

The Circular is available on the Company's website (https://ashokaindiaequity.com) and at the Company's registered office at 6th Floor, 125 London Wall, London EC2Y 5AS. This announcement has been released on behalf of the Company by order of the Board.

For further information please contact:

Capitalised terms used but not defined in this announcement have the meanings given to them in the Circular published by the Company today.

Appendix

Expected timetable

Notes:

The above times and/or dates may be subject to change and, in the event of such change, the revised times and/or dates will be notified to Shareholders by an announcement through a Regulatory Information Service.

All references to times in this announcement are to London times.

To Shareholders

Dear Sir or Madam

1 Introduction

The Board announces details of its proposal to amend the Company's investment policy to reflect its expectation that the Company's portfolio will comprise approximately 50 to 100 investments (as opposed to approximately 25 to 50 investments as currently stated) and to clarify that the portfolio may contain a lower or greater number of holdings at any time (the "Proposal").

Implementation of the Proposal requires the approval of Shareholders pursuant to the Listing Rules and the Directors are accordingly convening a General Meeting to be held at 11.30 a.m. on 29 July 2022, notice of which is set out at the end of the Circular.

The purpose of the Circular is to provide Shareholders with details of the Proposal and to set out the reasons why the Directors are recommending that Shareholders vote in favour of the Resolution at the General Meeting.

2 Background to and reasons for the Proposal

The Company is a UK investment trust whose investment objective is to achieve long-term capital appreciation, mainly through investment in securities listed in India and listed securities of companies with a significant presence in India.

The Company's current investment policy states that it is expected that the Company's portfolio will comprise approximately 25 to 50 investments. However, following discussions with the Investment Manager and Investment Adviser, the Board now considers it beneficial for the portfolio to typically hold more than 50 investments, and potentially closer to 100 investments at certain times. In addition, while the intention is for the Company to generally have between 50 and 100 investments within its portfolio, the actual number of investments in the Company's portfolio may vary from time to time depending on the availability of opportunities in the market.

The Company is therefore seeking approval to amend its investment policy to reflect the expectation that the portfolio will generally hold 50 to 100 investments and to clarify that the portfolio may contain a lower or greater number of holdings at any time. No other changes to the investment policy are being proposed.

The Proposal, if approved, should enable the Company to benefit from investment opportunities across a larger universe of Indian equities while remaining prudent from a risk and liquidity perspective.

The Investment Manager believes that the most attractive aspect of investing in India is the alpha opportunity that the Indian market presents compared to any other equity market globally given that the Indian market is still relatively under-researched and under-brokered. The Investment Manager believes that alpha opportunities exist across all capitalisation segments of the Indian equity market.

In particular, the small and mid-capitalisation ("SMID") segment of the Indian equity market has a large, and expanding, number of listed businesses to choose from. Besides the large number of listings, the SMID segment also tends to have heterogenous business models which makes it fertile hunting ground for bottom-up stock pickers like the Investment Manager.

SMID securities tend to have lower liquidity compared to large capitalisation securities. Hence, from a risk management and liquidity management perspective, the Investment Manager believes that it is desirable to have small position sizes in a higher number of SMID businesses.

With the growth in the Company's Net Asset Value from approximately £45 million to approximately £189 million (as at market close on 29 June 2022) since its IPO in 2018 (through both performance and issuance of Ordinary Shares), the number of investments in the Company's portfolio needs to increase accordingly in order to continue to take advantage of opportunities in the SMID segment while maintaining smaller position sizes. Accordingly, the Company is now expected to typically hold more than 50 investments in its portfolio, and potentially closer to 100 investments at certain times.

Ultimately the Investment Manager and the Board are primarily concerned with achieving long-term capital appreciation and spreading investment risk and, if considered appropriate, the Company's portfolio may occasionally comprise holdings outside the indicative range of 50 to 100 investments depending on the availability of opportunities in the market.

3 The proposed amendment to the Company's investment policy

If approved by Shareholders at the General Meeting, the Company's investment policy will be amended as follows with effect from the end of the General Meeting (with the proposed additions shown as underlined text and the proposed deletions shown as struck through text):

Investment Policy

The Company shall invest primarily in securities listed on any recognised stock exchange in India and securities of companies with a Significant Presence in India that are listed on stock exchanges outside India. The Company may also invest up to 10 per cent. of Gross Assets (calculated at the time of investment) in unquoted companies with a Significant Presence in India.

A company has a "Significant Presence in India" if, at the time of investment, it has its registered office or principal place of business in India, or exercises a material part of its economic activities in India.

The Company shall primarily invest in equities and equity-related securities (including preference shares, convertible unsecured loan stock, rights, warrants and other similar securities). The Company may also, in pursuance of the investment objective:

· hold publicly traded and privately placed debt instruments (including bonds, notes and debentures);

· hold cash and cash equivalents including money market liquid / debt mutual funds;

· hold equity-linked derivative instruments (including options and futures on indices and individual securities);

· hedge against directional risk using index futures and/or cash;

· hold participation notes; and

· invest in index funds, listed funds and exchange traded funds.

Notwithstanding the above, the Company does not intend to utilise derivatives or other financial instruments to take short positions, nor to increase the Company's gearing in excess of the limit set out in the borrowing policy, and any restrictions set out in this investment policy shall apply equally to exposure through derivatives.

The Company will invest no more than 15 per cent. of Gross Assets in any single holding or in the securities of any one issuer (calculated at the time of investment) and will typically invest no more than 40 per cent. of Gross Assets in any single sector (calculated at the time of investment).

The Company is not restricted to investing in the constituent companies of any benchmark. It is expected that the Company's portfolio will comprise approximately 2550 to 50100 investments although, in order to allow the Investment Manager and Investment Adviser flexibility to take advantage of opportunities as they arise, the portfolio may occasionally comprise holdings outside of this range.

In order to comply with the Listing Rules, the Company will not invest more than 10 per cent. of Gross Assets in other listed closed-ended investment funds, except that this restriction shall not apply to investments in listed closed-ended investment funds which themselves have stated investment policies to invest no more than 15 per cent. of their gross assets in other listed closed-ended investment funds. Additionally, in any event the Company will itself not invest more than 15 per cent. of its Gross Assets in other investment companies or investment trusts which are listed on the Official List.

The Company does not expect to take controlling interests in investee companies and will at all times invest and manage the portfolio in a manner consistent with spreading investment risk and in accordance with the FPI Regulations and applicable law.

It is expected that the Company's investments will predominantly be exposed to non-Sterling currencies (principally Rupees) in terms of their revenues and profits. The base currency of the Company is Sterling, which creates a potential currency exposure. Whilst the Company retains the flexibility to do so, it is expected in the normal course that this potential currency exposure will not be hedged using any sort of foreign currency transactions, forward transactions or derivative instruments.

Borrowing policy

The Company may deploy gearing to seek to enhance long-term capital growth and for the purposes of capital flexibility and efficient portfolio management. The Company may be geared through bank borrowings, the use of derivative instruments that have the effect of gearing the Company's portfolio, and any such other methods as the Board may determine. Gearing will not exceed 20 per cent. of Net Asset Value at the time of drawdown of the relevant borrowings or entering into the relevant transaction, as appropriate.

No material change will be made to the investment policy without the approval of Shareholders by ordinary resolution.

4 General Meeting

The Proposal requires the approval by Shareholders at the General Meeting which has been convened for 11.30 a.m. on 29 July 2022. A notice convening the General Meeting is set out at the end of the Circular.

The Resolution will be proposed as an ordinary resolution. An ordinary resolution requires a majority of members entitled to vote and present in person or by proxy to vote in favour in order for it to be passed.

In accordance with the Articles, all Shareholders present in person or by proxy shall upon a show of hands have one vote and upon a poll shall have one vote in respect of each Ordinary Share held. In order to ensure that a quorum is present at the General Meeting, it is necessary for two Shareholders entitled to vote to be present, whether in person or by proxy (or, if a corporation, by a representative).

The formal notice convening the General Meeting is set out at the end of the Circular.

5 Action to be taken in respect of the General Meeting

Shareholders will find enclosed with the Circular a personalised Form of Proxy for use at the General Meeting.

Shareholders are asked to complete and return the Form of Proxy, in accordance with the instructions printed thereon, to the Company's Registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY so as to be received as soon as possible and, in any event, by no later than 11.30 a.m. on 27 July 2022.

Recipients of the Circular who are the beneficial owners of Ordinary Shares held through a nominee should follow the instructions provided by their nominee or their professional adviser if no instructions have been provided.

As an alternative to completing and returning the accompanying Form of Proxy, you may submit your proxy electronically by accessing the Company Registrar's online voting portal www.investorcentre.co.uk/eproxy. For security purposes, you will be asked to enter the control number, your shareholder reference number (SRN) and personal identification number (PIN) to validate the submission of your proxy online. The control number and members' individual SRN and PIN numbers are shown on the accompanying Form of Proxy. If you are a member of CREST you may be able to use the CREST electronic proxy appointment service. Proxies sent electronically must be sent as soon as possible and, in any event, so as to be received no later than 11.30 a.m. on 27 July 2022 (or, in the case of an adjournment, no later than 48 hours before the time fixed for the holding of the adjourned meeting).

6 Recommendation

The Board considers that the passing of the Resolution is in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolution to be proposed at the General Meeting.

The Directors intend to vote in favour of the Resolution in respect of their holdings of Ordinary Shares, amounting to 327,093 Ordinary Shares in aggregate (representing approximately 0.30 per cent. of the issued share capital of the Company as at the date of this announcement).

Yours faithfully

Andrew Watkins

(Chairman)