The board at Witan Pacific (WPC) has binned its existing asset manager and given the mandate to Baillie Gifford with a plan to focus on the Chinese market.
While shareholders are still to approve the decision, the stock was up 3.8% to 366.5p on the news.
The plan is to change the name to Baillie Gifford China Growth Trust. Anyone not happy with the change of direction will have the option of realising some, or potentially all of their investment through a tender offer of 40% of the trust’s issued share capital at a 1% discount to net asset value (NAV).
The decision to focus on China is an interesting one given the growing political pressure on the country and some of its businesses.
Under Baillie Gifford’s management the plan is to invest in a portfolio of between 40 and 80 shares, with up to 20% able to be put into unquoted securities. The policy will also allow the company to borrow up to 20% of the value of its assets to invest.
WHO WILL BE IN CHARGE?
Day-to-day management of the fund will be in the hands of Sophie Earnshaw, manager of the Baillie Gifford China Fund (B3K73F7), and Roderick Snell who has steered the Baillie Gifford Pacific Fund (0606323) since 2010 and is deputy manager of Pacific Horizon Investment Trust (PHI).
Baillie Gifford will be paid an annual management fee of 0.75% of the first £50 million of NAV; plus 0.65% of NAV between £50 million and £250 million; plus 0.55% of NAV in excess of £250 million.
Numis commented: ‘We believe the appointment of Baillie Gifford is a positive for the fund, which has underperformed over a number of years.
‘The discount (8%) is tighter than most Asia Pacific ex Japan, helped by the discount control mechanism, but the fund has been off the radar of most investors given its Asia Pacific including Japan mandate, whilst most investors which to make separate asset allocation decisions on these regions.
'We believe it is right step for the board to seek to make the mandate more relevant to investors.’
The broker added that while it is a pretty ‘substantial shift’ for existing shareholders, it can see the product being popular thanks to Baillie Gifford’s strong track record.
Details of the meeting to approve the move are likely to be announced on or around 24 August.
