JP Morgan proposes merger of UK Smaller Companies and Mid Cap trusts

investmentweek.co.uk:

The boards of both trusts have noted the increased scale of the renamed vehicle, which is expected to hold net assets in excess of £430m.

JP Morgan UK Smaller Companies is set to absorb its mid cap counterpart, with the enlarged vehicle to be renamed JP Morgan UK Small Cap Growth & Income (JUGI).

An enhanced dividend policy will target a 4% yield on NAV per annum, calculated on the basis of 4% of NAV as at the end of the preceding financial year, paid in equal quarterly instalments.

abrdn UK Smaller Companies Growth trust cuts fees amid weak performance

Fee thresholds will also be reduced, with investors paying 0.65% on net assets up to £200m and 0.55% on net assets over this level, down from a £300m marker.

JP Morgan Mid Cap will be voluntarily liquidated, with part of the vehicle's assets transferred to the small cap vehicle in return for new ordinary shares, issued based on a formula asset value basis.

Investors in the mid cap trust will have an option to receiver a cash distribution, limited to an aggregate 15% of shares in issuance, paid at a discount to FAV of 2%, less the costs of realising the assets allocated to the cash pool.

Current managers of both trusts Georgina Brittain and Katen Patel will remain lead managers on the trust.

JP Morgan Mid Cap will pay its final dividend on 15 November with no change to the current figure, along with a «significant proportion of its accumulated revenue reserves» in a pre-liquidation dividend in lieu of a first half yearly dividend payable in 2024.

Following completion, the board of JUGI will consist of seven directors, four from the small cap vehicle and three from the mid cap trust, with one director set to step down at or prior to the 2024 AGM.

The boards of both trusts