Laxey case increases arbitrage threat

Professional Adviser
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schroders' philip middleton expects more arbitrage activity after laxey moves its sights from Barings investment trust to Legg Mason vehicle

The success of Laxey Partners in forcing the Baring Emerging Europe Trust (BEET) to give in to its reconstruction demands will open the way to further aggressive arbitrage plays. Laxey is demanding the £134.4m fund be reconstructed, allowing it a cash exit at close to NAV. The move by Laxey comes at a time when trust managers are already having difficulty keeping hold of investor funds amid a bear market and a decline in the investment trust sector not helped by the implosion of split-cap trusts. The decision by Barings to give in to Laxey's demands followed months of negotiation be...

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