Predictions last year that investment trusts trading at significant discounts would become targets for arbitragers have come true.
The UK-listed Kleinwort Overseas Investment Trust has recently put forward a proposal to put the $635 million fund into voluntary liquidation.
Arbitragers targeted the trust last year as it had been trading at a discount of up to 19 per cent.
The Kleinwort board failed to get shareholder approval last year for a scheme of reconstruction. Consequently new proposals including liquidation
have been put forward.
Under the proposals the trust's assets would be transferred to two unit
trusts.
Shareholders will be able to elect to exchange their holdings of one or a combination of:
- units in investment trust units, manageed by Save and Pssper. Its investment objective is to invest worldwide in any economic sector through investment trusts.
- units in Save and Prosper cash fund.
Kleinwort Overseas, which is a global equity fund, has a number of New
Zealand investors. It has been considered one of the best of the big four international, generalist trusts with neutral underweight UK holdings.
Figures supplied by Credit Suisse First Boston NZ Securities show KLO has
produced returns in New Zealand dollars of 32 per cent, 17.2 per cent and 12.1 per cent in the one, three and five year periods respectively.
Predictions last year that investment trusts trading at significant discounts would become targets for arbitragers have come true.