Rothschild Asset Management's International Biotechnology investment trust is under attack from US-...
Rothschild Asset Management's International Biotechnology investment trust is under attack from US-based arbitrageur Millennium Partners.
Millennium owns 10% of the £230m trust's shares and has called for an extraordinary meeting to force the board to consider reconstruction proposals.
The group wants the trust to offer an exit at close to NAV. On 22 May the trust was trading at a discount to NAV of 28.3%. Following Millennium's announce-ment on 24 May the discount on the trust narrowed to 15.3%.
The offering of an exit could either involve winding up the trust or converting it to an open-ended structure, where unit prices directly reflect the value of underlying assets.
Jeremy Curnock Cook, manager of the trust, said restructuring it into an open-ended vehicle or buying back shares to narrow the discount would be detrimental to the portfolio as it could force the sale of holdings at inopportune times. For instance, it could force the sale of a stake in a company before it has concluded its research or developed a product.
Ravi Anand, director corporate finance at HSBC, said due to the illiquid nature of the porfolio's stocks it could cost in excess of 10% of the trust's NAV for it to be wound up.
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