JPMorgan European Discovery Trust plc (LON:JEDT) has announced, further to its announcement on 20 June 2024, it will proceed with making a tender offer to give Shareholders the opportunity to tender up to 15 per cent. of the issued share capital in the Company (excluding Shares held in treasury) at a discount of 2 per cent. to the unaudited NAV per Share on the Calculation Date, less the costs and expenses of the Tender Offer. The Tender Offer is subject to Shareholder approval at the General Meeting.
In addition, and as announced by the Company on 20 June 2024, the Board intends to introduce a performance related tender offer for up to 15 per cent. of the issued share capital (excluding Shares held in treasury) if the Company’s NAV total return does not equal or exceed the benchmark total return (MSCI Europe ex UK Small Cap Index (net)) over the five-year period beginning on 1 April 2024 and ending on 31 March 2029. This conditional tender offer would be subject to a separate Shareholder approval and would also be at a discount of 2 per cent. to the unaudited NAV per Share at the relevant time, less the costs and expenses of implementing that further tender offer.
The Board believes that these tender offer proposals strike the right balance between responding to the Company’s discount and preserving scale for the Company. Following a period of encouraging performance for the Company, the Board believes that many Shareholders will wish to continue with their investment in the Company. The Board is nevertheless mindful that the Shares have traded at a discount to Net Asset Value for some time and, therefore, desires to address this imbalance through the Tender Offer in addition to the Company’s existing share buyback programme which will continue following completion of the Tender Offer.
Outlook
The portfolio managers are increasingly positive about the macro environment and the opportunities for European small caps. The Investment Manager believes that the macro headwinds faced by the asset class over the last few years driven by: (i) the supply chain crisis; (ii) Russia’s invasion of Ukraine; (iii) rising interest rates; and (iv) tightening financial conditions, have now turned and should offer tailwinds to performance. Given the nature of small cap companies, which are typically more domestically focused and levered to national economic performance and confidence, they tend to underperform in periods of macro-economic uncertainty. With these previous headwinds turned to tailwinds, the converse is now true.
The portfolio managers are observing a growing positive sentiment to European small caps, and this should lead investors to once again recognise the asset class’s long-term superior growth and track record. This improving sentiment, combined with a favourable market environment, is restoring consumer and industrial confidence upon which the Company’s portfolio is positioned to capitalise. As a result, the Investment Manager believes that the Company’s portfolio will continue to outperform as investment confidence increasingly returns to the asset class.
The Tender Offer
The Board has arranged for Cavendish Capital Markets Limited to conduct the Tender Offer for up to 15 per cent. of the Company’s Shares in issue at the Tender Price.
The key points of the Tender Offer are as follows:
· the Tender Offer will be restricted to 15 per cent. of the Shares in issue (excluding any Shares held in treasury) on the Record Date;
· all Eligible Shareholders tendering up to their Basic Entitlement will have their tender satisfied in full;
· Eligible Shareholders may tender Shares in excess of their Basic Entitlement, with such Excess Applications being satisfied if there are sufficient remaining Available Shares. Such Available Shares shall be apportioned to Eligible Shareholders pro rata to their Excess Applications should other Eligible Shareholders not tender the full amount of their Basic Entitlement and as a result of certain Overseas Shareholders not being permitted to participate in the Tender Offer; and
· the Tender Price per Share will be at a 2 per cent. discount to the unaudited NAV per Share on the Calculation Date, less the costs and expenses of the Tender Offer divided by the number of Shares successfully tendered.
In making the Tender Offer, Cavendish Capital Markets will purchase the Shares which have been validly tendered as principal by means of an on-market purchase from tendering Shareholders and will, subject to the terms and conditions contained in the Repurchase Agreement being satisfied, sell the tendered Shares acquired by it on to the Company. All Shares acquired by the Company from Cavendish Capital Markets under the Repurchase Agreement will be cancelled.
Shareholder Circular
The Company has today published a circular to Shareholders (the “Circular“) which contains details of the Tender Offer, together with details of how Shareholders can tender Shares for purchase, if they wish to do so. The Circular also includes a notice convening a general meeting of the Company which is to be held at held at 60 Victoria Embankment, London EC4Y 0JP at 11.00 a.m. on 2 September 2024.
The Circular can be viewed on the Company’s website and will shortly be submitted to the National Storage Mechanism and available for inspection at https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism.
Capitalised terms shall have the meaning attributed to them in the Circular unless otherwise defined in this announcement.
Expected Timetable
| Latest time and date for receipt of Forms of Proxy for the General Meeting | 11.00 a.m. on 29 August 2024 |
| General Meeting | 11.00 a.m. on 2 September 2024 |
| Results of General Meeting announced | 2 September 2024 |
| Latest time and date for receipt of Tender Forms and TTE Instructions | 1.00 p.m. on 3 September 2024 |
| Record Date for Tender Offer | 6.00 p.m. on 3 September 2024 |
| Calculation Date | close of business on 3 September 2024 |
| Results of Tender Offer and Tender Price announced | 5 September 2024 |
| CREST accounts settled in respect of unsold tendered Shares held in uncertificated form | no later than 6 September 2024 |
| Payments through CREST made in respect of Shares held in uncertificated form successfully tendered | 10 September 2024 |
| Cheques despatched in respect of Shares held in certificated form successfully tendered | 19 September 2024 |
| Despatch of balance share certificates in respect of unsold tendered Shares held in certificated form | 19 September 2024 |
All references to times in this announcement and the Circular are to London time unless otherwise stated.
The times and dates set out in the expected timetable may be adjusted by the Company in consultation with Cavendish, in which event details of the new times and/or dates will be notified to Shareholders by an announcement made by the Company through a Regulatory Information Service.
JPMorgan European Discovery Trust plc is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
