Following a comprehensive strategic review by its board, the assets of investment trust Witan [LON:WTAN] are to be rolled into Alliance Trust to form Alliance Witan, with net assets of around £5bn. Alliance Trust’s investment strategy, which provides exclusive access to the best ideas of leading active managers globally, remains unchanged.
The transaction provides continuity for Witan shareholders to continue investing in a multi-manager strategy. The combination of Alliance and Witan will create an even more liquid, high-profile and cost efficient one-stop shop for global equities.
Alliance Trust shareholders, already enjoying 13.2% per annum growth in dividends over the last five years, should benefit from further step up in the level of dividend payments. The transaction is due to complete September/October when the new shares for Alliance Witan will be issued to investors.
This follows a strategic review by the board of Witan of its investment management arrangements, triggered by the planned retirement of Andrew Bell, Witan’s Chief Executive Officer.
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The combination will build upon the multi-manager investment model already employed by Alliance Trust, which utilises the management skills and resources of Willis Towers Watson (WTW) to create an actively managed global equity portfolio chosen by stock pickers.
Alliance Witan said it will apply that methodology within a more liquid, high-profile and cost-efficient “one stop shop” investment vehicle for global equities. “With net assets of around £5 billion, significant economies of scale, eligibility for FTSE 100 inclusion, well-established brand recognition on both sides, and proven marketing expertise backed by dedicated resources and budget, Alliance Witan will aim to be the UK’s leading global equity investment proposition, sitting at the core of investors’ portfolios,” it said in a press note this morning.
Reconstruction scheme under Insolvency Act
The combination will be undertaken through a scheme of reconstruction by Witan under s110 of the Insolvency Act 1986, which will see Witan roll into Alliance Trust in exchange for the issue of new Alliance Witan shares to the continuing Witan shareholders.
Alliance Trust’s investment manager, WTW, will have overall responsibility for managing the assets of the combined Alliance Witan. It will employ the same proven model as has been successfully utilised by Alliance Trust since WTW’s appointment in 2017 – selecting a diverse team of expert stock pickers, each of whom invests in a customised selection of 10-20 of their ‘best ideas’.
Dean Buckley, Chairman of Alliance Trust, commented: “Shareholders will benefit from access to the proven investment process implemented by our investment manager, Willis Towers Watson, and access to the world’s leading stock pickers. This is also a significant moment for our industry in broader terms – Alliance Witan represents a key milestone in the history of the investment trust structure which has demonstrated its capabilities very effectively over many decades.”
The merger combines two historic investment companies, established in 1888 and 1909 respectively, and recognises the attractive opportunity to deploy the investment strategy, which has been proven to be robust through the investment cycle, at significantly greater scale.
Since Bell announced his intention to retire, Witan has been through an extensive process to identify the best candidate to take on the management of shareholders’ assets. The board assessed a number of very strong proposals, including single-manager candidates with impressive track records. The Witan board was unanimous in recommending the combination with Alliance Trust, which allows the continuation of the multi manager approach at lower fees and in a larger, more liquid vehicle.
The companies are considered to share similar cultures and a mutual desire to provide a “one stop shop” for retail investors in global equities.
