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Sanditon Investment Trust proposes wind-up

Sanditon Investment Trust has proposed winding up due to lack of shareholder support
October 24, 2019

Sanditon Investment Trust’s (SIT) board has proposed winding it up following indications that large shareholders would have voted against continuation in a vote due at the trust's 2020 annual general meeting (AGM). It follows the decision of the trust’s manager, Sanditon Asset Management, to wind up.

The trust, which launched in 2014 and mainly invests in UK equities, aims to provide an absolute return in excess of 2 per cent over inflation as measured by RPIX, and to provide low correlation with UK and European equity indices. It also holds a 20 per cent stake in Sanditon Asset Management, but this only accounted for 2.8 per cent of its assets at the end of September.

Relative and absolute performance has not been good: the trust’s NAV total returns have underperformed the FTSE All-Share index and the average return for UK equity growth investment trusts over one, three and five years, with negative returns over each period. Its share price total returns have been even worse so it has traded on a discount to net asset value (NAV) over the past two years.

At close of play on 17 October, the day before Sanditon Investment Trust’s board announced the wind-up proposals, the trust was on a share price of 81.3p a share and a discount to NAV of 12.3 per cent. But by close of play on 22 October it was on a share price of 88p and its discount to NAV had tightened to 6 per cent.

The trust raised £50m in its initial public offering in 2014, but as of 22 October had a market cap of £44m.

Rupert Tyer, chief executive of Sanditon Asset Management, said: “We became aware that there is not an appetite among investors to continue with small illiquid investment trusts."

The trust’s board will recommend that shareholders vote in favour of winding it up and a meeting to vote on this will be held after this year’s AGM in December. The details of this will be sent to the trust’s shareholders by 5 November.

Sanditon Asset Management’s directors, who hold about 21.99 per cent of the trust’s shares, will vote in favour of winding up the trust, as will its board, which holds a further 1.47 per cent. For the proposal to pass, 75 per cent of the votes cast must be in favour of it.

Other large shareholders in the trust include Premier Asset Management, which holds 26.98 per cent of the trust’s shares and asset manager Schroders, which holds 9.3 per cent. Investment platform Hargreaves Lansdown holds 12 per cent of the trust’s shares on behalf of private investors.

If the wind-up is approved, shareholders will receive cash in return for their holding in the trust.

 

Fund/benchmark1-year total return (%)3-year cumulative total return (%)5-year cumulative total return (%)
Sanditon Investment Trust NAV-2-8-7
Sanditon Investment Trust share price-4-20-22
UK equity growth trust average NAV-11031
UK equity growth trust average share price-6726
FTSE All Share index71943

Source: Winterflood, as at 18 October 2019