Last year saw record consolidation and corporate action in the investment trust sector. If the past seven months are anything to go by, 2025 will be a year of note as well. At the beginning of the year, 20 trusts were undergoing managed wind-downs, and since January, a further six have proposed or had wind-downs approved, according to Deutsche Numis.
Wind-downs usually happen because an asset class, strategy or individual trust is out of favour. At the same time, they can present a new opportunity if they offer a timetable and a catalyst for realising value from a portfolio that is persistently trading at a deep discount to net asset value (NAV).
This is especially true in the alternative-asset segment of the market. That said, alternatives trusts normally own illiquid assets, which means it can take some time to realise value. If a buyer cannot be found for the entire portfolio, the trust must sell assets piecemeal. Take NB Distressed Debt (LSE: NBDG) as an example: it began to wind down in 2018 and is still ongoing – although the board hopes it has entered the final stages of asset sales, according to its latest update. So this kind of investing certainly is not a trade for anybody with a short-term time horizon.
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Investment trusts winding down
Abrdn European Logistics Income (LSE: ASLI) entered a managed wind-down last year following a failed sales process for the entire portfolio. It sold three assets in the first quarter of the year and returned an initial £16.5 million to investors (5.3% of its NAV). Following additional sales, 16 of its 27 assets have now been liquidated and further capital returns are planned in August and September. The estimated NAV is now 57.9p, reckon analysts at Deutsche Numis, putting the shares on a discount of 17%.
JPMorgan Global Core Real Assets (LSE: JARA) failed a continuation vote in September and is now returning assets to investors. The first cash from sales, totalling £33 million or 17% of NAV, was paid in February. Further sales are in the pipeline, and the trust expects to redeem 80% of assets by the end of 2026. The end-June NAV of 89.1p implies the shares are trading at a discount of 11%.
Following a strategic review, Riverstone Energy (LSE: RSE) has proposed a managed wind-down, with investors set to vote on this on 22 August. Management has laid out a plan to distribute two-thirds of the capital by 31 March 2026, with the remaining illiquid assets sold by the end of 2027. The trust’s reported discount has recently narrowed to 22%, based on the latest NAV of 1,136p.
Investors need to be aware that the manager is getting a termination fee of 7.5% of realisation proceeds, but even allowing for that, the discount is still in double-digits.
Investment trusts to watch
Syncona (LSE: SYNC), the once high-flying backer of early-stage biotech companies, announced in June that it will wind down its portfolio. The trust has said it will aim to continue supporting key companies in its portfolio and open a private vehicle for those investors interested in rolling their investment over. This puts a question mark over the liquidation timetable, but with a discount of about 40% there could be a lot of value there for patient investors.
Life Science Reit (LSE: LABS), which announced a strategic review in March, recently said it has received significant interest from buyers for parts of the portfolio. Management is also continuing to explore a managed wind-down. The portfolio includes assets at Oxford Technology Park and Cambourne Park Science & Tech Campus – both located in two high-growth, tech-focused areas of the country – and King’s Cross in London. The Reit has struggled since listing (recent leasing has been slower than expected, with occupancy now at 85%) and has suspended its dividend. But at a 32% discount to NAV, it is worth watching closely.
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