Alliance Trust and Witan in £5 Billion Merger

Under
the
terms
of
the
arrangement,
Witan
will
undertake
a
scheme
of
reconstruction
to
roll
into
Alliance
Trust,
which
has
a
market
value
of
£3.42
billion.
That
will
come
in
exchange
for
the
issue
of
new
Alliance
Witan
shares
to
existing
Witan
shareholders.

The
newly
merged
trust
will
create
a
rival
to
FTSE
100
listed
F&C
Investment
Trust
(FCIT),
which
has
a
current
market
value
of
£5.13
billion,
and
a
Morningstar
Medalist
Rating
of
Bronze.

Alliance
Trust
is
one
of
the
UK’s
most
visible
investment
trusts,
and
beat
its
benchmark,
the
MSCI
All
Country
World
Index,
in
the
last
financial
year.
It
is
currently
trading
at
a
-5.64%
discount,
which
means
the
shares
are
trading
below
the
net
asset
value.

The
smaller
of
the
two
trusts,
Witan
has
a
market
capitalisation
of
£1.64
billion
and
is
trading
at
a
-7.83%
discount
to
NAV.
Shares
in
Witan
rose
nearly
4%
on
Wednesday
morning
to
271p.

The
“multi-manager”
approach
used
by
both
trusts
is
set
to
continue.

“Since
Andrew
Bell
announced
his
decision
to
retire,
we
have
been
through
an
extensive
process
to
identify
the
best
candidate
to
take
on
the
management
of
our
shareholders’
assets,”
Witan
chairman
Andrew
Ross
said
today.

“The
board
assessed
a
number
of
very
strong
proposals,
including
single-manager
candidates
with
impressive
track
records.
However,
the
Board
was
unanimous
in
recommending
the
combination
with
Alliance
Trust,
which
allows
the
continuation
of
our
multi-manager
approach
at
lower
fees
and
in
a
larger,
more
liquid,
vehicle.”

Witan/Alliance
Trust
Portfolios
Are
Different

Alliance
Trust
and
Witan
Investment
Trust
have
both
previously
used
multi-manager
strategies.
Alliance
Trust
has
used
Willis
Towers
Watson
as
an
investment
manager,
while
Witan
has
a
panel
of
six
outsourced
investment
managers
–
including
both
Lindsell
Train
and
Artemis.

Following
the
merger,
Willis
Towers
Watson
will
have
“overall
responsibility”
for
managing
the
assets
of
the
combined
trust,
whose
investments
will
be
selected
according
to
a
10-20
“best
ideas”
approach.

Despite
the
similar
approach,
both
trusts’
portfolios
look
distinctly
different.
Alliance
Trust’s
top
three
holdings
include
“Magnificent
Seven”
constituents
Alphabet
(GOOGL),
Microsoft
(MSFT)
and
Amazon
(AMZN),
with
Visa
(VISA)
and
Nvidia
(NVDA)
in
fourth
and
fifth
position.

Witan’s
top
holdings,
meanwhile,
consist
of
the

GMO
Climate
Change
fund
and
a

Vanguard
FTSE
250
exchange-traded
fund,
with
the

Apax
Global
Alpha
fund,
Amazon,
and
the

VH
Global
Sustainable
Energy
fund
in
third,
fourth,
and
fifth
positions,
respectively.

During
our
Governance
Week
in
January
this
year,
we
asked
outgoing
Witan
chief
executive
Andrew
Bell
about
proposed
changes
to
the
UK’s
listing
rules
–
amid
what
has
been
termed
a
crisis
of
confidence
in
UK
public
markets.

In
the
interview
with
Morningstar.co.uk,
he
urged
the
Financial
Conduct
Authority
not
to

“throw
the
baby
out
with
the
bathwater”
in
the
face
of
political
pressure
to
give
the
City
of
London
its
second
“big
bang”.

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