Liontrust has announced its intention to purchase the entire issued share capital of Alliance Trust Investments, in a move that will bring over around £2.3bn in assets under management.
Liontrust has entered into a conditional share purchase agreement with Alliance Trust Investments (ATI) to purchase its entire issue share capital for a total consideration of up to £30m, inclusive of the new asset value of the trust.
The acquisition is likely to bring Liontrust's total assets under management to more than £8bn and is expected to complete in April 2017.
The ATI team, which is headed up by Peter Michaelis and manages 11 sustainable investment funds, will join Liontrust as part of the aquisition.
ATI's funds will continue to be managed according to their existing investment process, in which the team looks for well managed companies that have good fundamentals and which it believes the market undervalues.
The news comes after Liontrust announced earlier this year that it had acquired Argonaut's European Income and Enhanced Income funds, with manager Olly Russ moving to the group. It also follows Liontrust's recent appointment of former Miton sales and marketing director Ian Chimes as head of global distribution.
John Ions (pictured), chief executive at Liontrust, said: "We have been very impressed by Peter Michaelis and the team at ATI. The investment managers will be an excellent addition to our seven teams as they are very experienced, have a clear and robust investment process and have shown that sustainable investment can provide strong investment returns as well as meeting investors' values.
"The team brings with it a broad range of existing equity and fixed income funds and a long-term track record: Peter was at Aviva Investors, including as head of sustainable and responsible investment, for 11 years before moving to ATI in August 2012."
He continued: "There is strong demand for sustainable investment in the UK and internationally. Increasingly, consumers expect the companies they use to be socially responsible and the demand for sustainable investment will only grow with the rise of millennials.
"The acquisition of ATI puts us in a very strong position to meet this demand. We look forward to promoting the team and the sustainable investment funds in the UK and across continental Europe."
Peter Michaelis added: "We have been attracted to Liontrust by the culture of the company and the environment the company provides for fund managers. We will continue to focus on running money according to our own investment process.
"Liontrust will provide the team and investors with long-term stability. We have also been impressed by the strength of Liontrust's brand profile and its distribution capability. This is a very important consideration for us as we look to raise the profile of the team and the funds we manage.
"It is a good time to make the move to Liontrust because of the opportunities that the UK retail, institutional and European markets offer sustainable investment funds."
Alliance Trust sold ATI following the completion of its strategic review, first announced in May 2016, which will see it move from a single manager to a multi-manager approach, with each of its equity managers creating a focused portfolio of their top investment selections.
The board of Alliance Trust said the change to a multi-manager style represents the best way to deliver further improvement in shareholder value, with the trust's equity portfolio making up 98.9% of net shareholder assets at the end of November 2016.
Responsibility for investing the trust's equity portfolio will move away from ATI into a multi-manager model. Alliance Trust said eight of the world's top-rated equity managers will be appointed, each of whom will create a portfolio for the trust of typically around 20 stocks, representing their best investment ideas.
The Board of Alliance Trust has appoint Willis Towers Watson as the Trust's overall investment manager.
The target for the equity portfolio will be to outperform the MSCI All Country World index by 2% per annum net of costs over rolling three-year periods. Alongside this, the company has also reaffirmed itts commitment to its existing progressive dividend policy.
The Trust also said its sale of ATI to Liontrust for up to £30m, which will represent a premium of at least £5m to book value.
Shareholders will be provided with the opportunity to vote on the new approach to investment management.
Lord Smith of Kelvin, Chairman of Alliance Trust, said: "Since May, the board has evaluated carefully a broad range of options, with an open mind and a clear line of sight on how best we could improve the trust's performance.
"We believe there is good appetite for a global equity investment trust and that will remain our overall positioning. However, we are proposing a new approach to the investment management of the equity portfolio.
"Our proposal is that we will move from a single manager to multiple equity managers. All managers will be rated best-in-class and each will create a focused portfolio of their best investment selections.
"We are confident that this exciting and differentiated investment approach will help to improve Alliance Trust's performance on a consistent basis. Accordingly, we have doubled the level targeted for outperformance, reaffirmed our ambition to continue our track record of year-on-year dividend growth, yet at a competitive cost. We firmly believe that this will put Alliance Trust on a strong footing for many years to come."
The review was initiated last year, after activist investors Elliott Advisers, which currently have a 16% stake in Alliance Trust, demanded an overhaul of the trust's board, in a bid to ensure it was "fully independent, comprising solely non-executive directors".
The trust has also seen major changes on its board of directors, with Chairman Karin Forseke stepping down on 1 January, to be replaced by Lord Smith, while chief executive Katherine Garrett-Cox gave up her role in March.
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