Investment Co. Regulatory News (INV)

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY EEA STATE OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION. PLEASE SEE THE SECTION ENTITLED "DISCLAIMER" TOWARDS THE END OF THIS ANNOUNCEMENT.

This announcement is an advertisement for the purposes of the Prospectus Regulation Rules of the UK Financial Conduct Authority (the "FCA") and does not constitute a prospectus. Investors should not subscribe for or purchase any shares referred to in this announcement except on the basis of information contained in the prospectus expected to be published by The Investment Company plc (the "Prospectus") in due course (and any supplementary prospectus) and not in reliance on this announcement. Any approval of the Prospectus by the FCA should not be understood as an endorsement of the securities that are the subject of the Prospectus. Potential investors should read the Prospectus when published and in particular the risk factors set out therein before making an investment decision in order to fully understand the potential risks and rewards associated with the decision to invest in the Company's securities. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation or recommendation to purchase, sell or subscribe for any securities or investments of any description, or a recommendation regarding the issue or the provision of investment advice by any party. Copies of the Prospectus when published will, subject to certain access restrictions, be made available for viewing at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website (https://theinvestmentcompanyplc.co.uk/).

The information contained within this announcement is considered by The Investment Company plc to constitute inside information pursuant to Article 7 of EU Regulation No. 596/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via a Regulatory Information Service, this inside information will be considered to be in the public domain.

9 June 2023

The Investment Company plc

(the "Company")

LEI: 2138004PBWN5WM2XST62

Update regarding Proposals

Further to its announcement on 30 March 2023, the Board of The Investment Company plc is pleased to announce that the Company shortly expects to publish a circular addressed to the Company's Shareholders to explain the rationale, and seek the required Shareholder approval, for the proposed:

(i) appointment of Chelverton Asset Management Limited ("Chelverton") as external investment manager to the Company;

(ii) amendment to the Company's investment objective and policy in order to maximise capital growth over the long term by investing in high quality Small and Mid-cap Companies listed on the Main Market, AQSE and AIM;

(iii)  Tender Offer for up to 100% of the Company's issued share capital so as to provide those Shareholders who wish to do so with a liquidity opportunity at a price reflective of the NAV of the Company;

(iv)  Issue, comprising a Placing, Offer for Subscription and Intermediaries Offer, of up to 6 million Ordinary Shares to allow existing Shareholders and new investors to acquire Ordinary Shares in the capital of the Company;

(v) appointment of David Horner as a non-independent non-executive Director;

(vi)  amendment to the Company's articles of association in relation to the timing of the Company's next continuation vote;

(vii) sub-division of the Company's Ordinary Shares with a nominal value of £0.50 each into ordinary shares with a nominal value of £0.10 each, following Completion of the Tender Offer and the Issue; and

(viii) cancellation of the amounts standing to the credit of the Company's share premium account and capital redemption reserve in order to increase the Company's distributable reserves to fund the Tender Offer in full,

(together, the "Proposals").

The Company is also intending to publish a Prospectus in connection with the Proposals.

The Proposals are subject to Shareholder approval and the Directors intend to convene a general meeting at which 3 resolutions will be proposed. Resolutions 1 and 2 will seek approval for the cancellation of the Company's share premium account and capital redemption reserve. Resolution 3 will seek approval for the amendment to the Company's investment objective, the amendment to the Company's articles of association, the repurchase by the Company of Ordinary Shares pursuant to the Tender Offer, the allotment of Ordinary Shares otherwise than on a pre-emptive basis for the purposes of the Issue and the subsequent sub-division of Ordinary Shares. As the Proposals set out in Resolution 3 will be inter-conditional, Shareholder approval is being sought by way of a single resolution. The Proposals are also subject to the satisfaction of certain conditions including, in particular, the "Minimum Participation Condition" (being that the Company receives valid tender requests pursuant to the Tender Offer up to an amount which, taken together with valid commitments received by the Company to purchase or subscribe for Ordinary Shares pursuant to the Placing, would result in the Company having sufficient distributable reserves to implement the Tender Offer). The Minimum Participation Condition will be calculated based on the Company's position immediately following the completion of the Proposals and therefore following the Company's proposed cancellation of its share premium account and capital redemption reserve (if approved by Shareholders and the Court).

If Shareholder approval is not obtained and/or the conditions (including the Minimum Participation Condition) are not satisfied, the Proposals will not proceed and the Company is expected to be wound up at or before the Company's 2023 annual general meeting as outlined in the Company's half-year report for the period ended 31 December 2022.

A further announcement will be made upon publication of the Circular and Prospectus.

Background to the Proposals

On 4 November 2020, Shareholders approved a new investment objective to protect the purchasing power of the Company's capital in real terms. Following this, the Board disposed of the Company's portfolio of preference shares, fixed-income securities and other income-oriented investments and made investments in companies which demonstrated good financial health and avoided unnecessary risk. The remainder of the Portfolio was kept in the form of gold bullion.

Whilst the Board is satisfied with the Company's performance since 2020, it has, however, been mindful for some time of the size of the Company, together with the illiquid nature of the Ordinary Shares, and the impact of these factors on the discount to NAV at which the Ordinary Shares trade, which has persisted despite the performance. Accordingly, the Board announced in February 2023 that it was actively considering credible opportunities to grow the size and increase the liquidity of the Company while also providing an immediate complete liquidity option for all Shareholders who wish to realise their shareholding.

Benefits of the Proposals

The Proposals are the result of a detailed review of the options available to the Company. The Board believes that the Proposals will provide Shareholders with the opportunity to remain in a vehicle managed by an award-winning asset manager with a strong track record of creating value for its investors whilst increasing investment funds size. For those Shareholders who wish to realise their investment, the Proposals enable Shareholders to receive a full cash alternative (through a process which is comparable in terms of cost, but more timely, than a liquidation of the Company).

In particular, the Proposals are intended to offer the following benefits to Shareholders:

· the option to continue their investment in the Company and to benefit from the expertise of Chelverton, an award-winning asset manager with a strong record of creating value for its investors, as the Proposed Manager of the Company with a new investment objective and policy;

· the expertise of David Horner, the founder of Chelverton, who has 30 years' experience specialising in UK small to mid-cap quoted investments and SME unquoted investments, as a member of the Board;

· a medium-term objective of growing the size of the Company, which it is intended will increase the liquidity of the Ordinary Shares and narrow the discount at which the Ordinary Shares currently trade; and

· the opportunity for Shareholders who no longer wish to remain invested in the Company to realise their investment, in whole or in part, at the Tender Price.

In light of the above, the Board considers that implementing the Proposals is in the best interests of the Company and the Shareholders as a whole.

Appointment of Chelverton Asset Management Limited

Conditional on, and with effect from, Completion of the Tender Offer, the Company has appointed Chelverton to provide portfolio advice and day-to-day portfolio management services, including the origination and evaluation of investment opportunities and the execution of transactions.

Chelverton commenced trading in 1998 and was formed by David Horner, who has considerable experience of analysing investments and working with smaller companies. Chelverton is largely owned by its employees. Chelverton is a specialist fund manager, focused on UK Small and Mid-cap Companies, and has a successful track record.

As at the Latest Practicable Date, the Proposed Manager had total funds under management of approximately £1.53 billion, including two investment trusts and three OEICs.

The MI Chelverton UK Equity Growth Fund (an open-ended fund) has a similar investment policy to the Company's proposed investment policy. MI Chelverton UK Equity Growth Fund looks to achieve long-term capital growth by investing primarily in a portfolio of UK Small and Mid-cap Companies listed on the Main Market and AIM.

The following table shows the investment performance record of the MI Chelverton UK Equity Growth Fund NAV total return data relative to IA UK All Companies funds (being funds which invest at least 80 per cent. of their assets in UK equities with the primary objective of achieving capital growth) and the Numis Smaller Companies Plus AIM Ex Investment Trusts (which covers all stocks making up the smallest 10 per cent. by value of the UK fully listed equity market excluding investment trusts).

Changes to the investment objective and policy

In connection with the appointment of the Proposed Manager and its strategy, the Board proposes to change the investment objective and policy, in order to maximise capital growth over the long term by investing in high quality quoted Small and Mid-cap Companies.

A full comparison of the existing and proposed investment objectives and policies of the Company will be set out in the Circular.

The amendment to the Company's investment objective and policy requires the approval of Ordinary Shareholders by ordinary resolution in accordance with the Listing Rules. As the Proposals (other than the cancellation of the Company's share premium account and capital redemption reserve) are inter-conditional, Shareholder approval for the changes to the investment objective and policy will be sought by tabling Resolution 3 at the General Meeting, which will be proposed as a special resolution.

Details of the Tender Offer

The Company is proposing a Tender Offer to be made for up to 100 per cent. of the Ordinary Shares in issue on the Tender Offer Record Date (excluding treasury Ordinary Shares) at the Tender Price to enable those Qualifying Shareholders who wish to realise their investment in the Company to do so (in whole or in part).

The price at which Qualifying Shareholders may tender their Ordinary Shares is not known at this date and will be calculated based on the Post-Completion NAV once the results of the Issue and the Tender Offer are known. The Post-Completion NAV will be calculated using the NAV on the Calculation Date, adjusted by adding: (i) the proceeds of new Ordinary Shares issued pursuant to the Placing, Offer for Subscription and Intermediaries Offer; less (ii) any payment made by the Company to repurchase Ordinary Shares pursuant to the Tender Offer; and less (iii) the Transaction Costs. The Tender Price will be equal to the Post-Completion NAV divided by the number of Ordinary Shares in issue following Completion of the Tender Offer and the Issue.

The Transaction Costs will be shared amongst the pools of capital value represented by Tendering Shareholders, Remaining Shareholders and Incoming Shareholders, each as a proportion of the NAV on the Calculation Date.

The Tender Price will be determined as at the Calculation Date, which is expected to be 18 July 2023. As at the close of business on 7 June 2023 (being the Latest Practicable Date), the Tender Price would have been 349.80 pence (rounded to two decimal places) as at that date, on the assumption that 70 per cent. of existing Shareholders participate in the Tender Offer and demand for Ordinary Shares pursuant to the Issue equates to £10 million.

As at the close of business on 7 June 2023 (being the Latest Practicable Date), the mid-market price of the Ordinary Shares on the London Stock Exchange was 340.00 pence and the most recently announced NAV per Ordinary Share was 357.06 pence (rounded to two decimal places). Accordingly, the Tender Price would have represented a premium of 2.9 per cent. to the mid-market price on such date and a discount of 2.0 per cent. to the most recently announced NAV.

None of the continuing Directors intend to tender of their Ordinary Shares pursuant to the Tender Offer.

The Tender Offer is not being made to Shareholders who are resident in, or citizens of, Restricted Territories. In particular, Restricted Shareholders are being excluded from the Tender Offer in order to ensure compliance with applicable local laws relating to the implementation of the Tender Offer.

Details of the Issue

The Company is implementing the Issue of up to 6 million Ordinary Shares by way of a Placing, an Offer for Subscription and an Intermediaries Offer.

The price at which the Company will issue new Ordinary Shares pursuant to the Issue will be the NAV per Ordinary Share (before deducting any accrued or paid Transaction Costs) on the Calculation Date. The Issue Price will be notified to Shareholders and investors by way of RIS as soon as is practicable after the Calculation Date.

The Issue is being undertaken in conjunction with the Tender Offer. Pursuant to the Tender Offer, where there are investors willing to acquire Ordinary Shares, all or some of the Ordinary Shares which are the subject of acceptances by Tendering Shareholders will not be repurchased by the Company pursuant to the Repurchase Agreement but instead shall be sold to Incoming Shareholders pursuant to the Placing by way of a Matched Bargain Facility. To the extent that the Company receives commitments from investors to acquire Ordinary Shares under the Placing in excess of the number of Ordinary Shares available to purchase from Tendering Shareholders, such excess demand shall be satisfied by the issue of new Ordinary Shares. Investors may also subscribe for new Ordinary Shares pursuant to the Offer for Subscription and/or the Intermediaries Offer.

The Directors intend to use the net proceeds of the Issue to acquire investments in accordance with the Company's proposed new investment objective and investment policy. It is expected that the net proceeds of the Issue will be substantially invested within one month of Admission.

Proposed Manager Participation

The Proposed Director and the following employees of the Proposed Manager or members of their family intend to subscribe for Ordinary Shares with an aggregate value of approximately £1.5 million pursuant to the Issue

Smaller Related Party Transaction

David Horner's participation will be regarded as a smaller related party transaction under the Listing Rules and a separate announcement will be made upon completion of the Issue.

Notice of GM

A notice convening a General Meeting of the Company will be set out at the end of the Circular. The General Meeting has been convened for 11.00 a.m. on 26 June 2023 at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London, EC2M 7SH.

Further details of the Proposals will be set out in the Prospectus. When published, a copy of the Prospectus will be submitted to the National Storage Mechanism and will shortly thereafter be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism . A copy of the Prospectus and Circular will, when published, be available on the Company's website at https://theinvestmentcompanyplc.co.uk/. Full details of the Terms and Conditions of the Tender Offer and the Issue will be made available in the Circular and the Prospectus.

Capitalised terms used but not defined in this announcement shall have the meanings set out in the Prospectus.

Expected Timetable

The dates and times specified in the timetable above are subject to the passing of the Resolutions at the General Meeting and the satisfaction of the Continuation Conditions and are subject to change without further notice. All references to times in this Prospectus are to London time unless otherwise stated. Any changes to the expected Issue timetable will be notified by the Company through a Regulatory Information Service.

Enquiries

IMPORTANT NOTICES

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the Prospectus expected to be published by the Company in due course (and in any supplementary prospectus) and not in reliance on this announcement. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description or a recommendation regarding the issue or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase shares in the Company.

The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The material contained in this announcement is given as at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment. In particular, any proposals referred to herein are subject to revision and amendment.

Each of Singer Capital Markets Advisory LLP (the "Sponsor") and Singer Capital Markets Securities Limited ("SCM Securities") is authorised and regulated in the United Kingdom by the FCA. References in this document to "Singer Capital Markets" are references to either the Sponsor or SCM Securities or both of them, as appropriate. Singer Capital Markets is acting exclusively for the Company and for no-one else in connection with the matters described in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the clients of Singer Capital Markets, nor for providing advice in relation to any of the matters referred to in this announcement.

The Ordinary Shares have not been and will not be registered under the United States Securities Act of 1933 (as amended) (the "US Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold within the United States or to, or for the account or benefit of, US Persons (as defined in Regulation S under the US Securities Act ("Regulation S")), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction in the United States. In addition, the Company has not been and will not be registered under the United States Investment Company Act of 1940, (as amended) (the "US Investment Company Act"), and recipients of the Prospectus will not be entitled to the benefits of that Act.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. No public offering of securities is being made in the United States.

The offer and sale of Ordinary Shares has not been and will not be registered under the applicable securities laws of any Member State of the EEA, Canada, Japan or the Republic of South Africa. Subject to certain exemptions, the Ordinary Shares may not be offered to or sold within any Member State of the EEA, Canada, Japan or the Republic of South Africa or to any national, resident or citizen of any Member State of the EEA, Canada, Japan or the Republic of South Africa. Neither the Company nor Singer Capital Markets, nor any of their respective representatives, is making any representation to any offeree or purchaser of the Ordinary Shares regarding the legality of an investment in the Ordinary Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser. Each investor should consult with his or her own advisers as to the legal, tax, business, financial and related aspects of a purchase of the Ordinary Shares.

The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance should not be considered a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "might", "will" or "should" or, in each case, their negative or other variations or similar expressions. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed investments and objectives, are forward-looking statements.

Forward-looking statements are subject to risks and uncertainties and, accordingly, the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These factors include but are not limited to those described in the Prospectus. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. Subject to their respective legal and regulatory obligations (including under the Prospectus Regulation Rules), the Company, the Proposed Manager and Singer Capital Markets expressly disclaim any obligations or undertaking to update or revise any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required to do so by law or any appropriate regulatory authority, including FSMA, the Listing Rules, the Prospectus Regulation Rules, the Disclosure Guidance and Transparency Rules, the UK Prospectus Regulation and UK MAR.

None of the Company, the Proposed Manager, Singer Capital Markets, or any of their respective affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, the Proposed Manager, Singer Capital Markets, and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

Information to distributors

Solely for the purposes of the product governance requirements contained within: (a) the UK's implementation of EU Directive 2014/65/EU on markets in financial instruments, as amended ("UK MiFID II") and (b) the UK's implementation of Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing UK MiFID II, and in particular Chapter 3 of the Product Intervention and Product Governance Sourcebook of the FCA (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Ordinary Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in UK MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by UK MiFID II (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, distributors (such term to have the same meaning as in the MiFID II Product Governance Requirements) should note that: the market price of the Ordinary Shares may decline and investors could lose all or part of their investment; the Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Issue.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of UK MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Ordinary Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the Ordinary Shares and determining appropriate distribution channels.

Key information document

In accordance with the UK PRIIPs Regulation, the Company has prepared a Key Information Document (the "KID") in respect of the Ordinary Shares and made it available at https://theinvestmentcompanyplc.co.uk. The UK PRIIPs Regulation requires that the KID is made available to "retail investors" prior to them making an investment decision in respect of the Ordinary Shares. If you are distributing Ordinary Shares, it is your responsibility to ensure the KID is provided to any relevant clients.