Majedie Investments is to close its emerging markets boutique and switch assets into the separate Majedie Asset Management (MAM) business.
The board of the investment trust has appointed MAM to run the vast majority of the £164.5m asset base with immediate effect. Javelin Capital, which had run £29.5m of Majedie's assets in its EM Alpha fund, will be wound up.
That allocation will be switched into MAM's long/short Tortoise fund, while Majedie will also transfer its core portfolio to MAM.
Accordingly, the company will invest £81m into a segregated portfolio to be run in line with MAM's UK Equity fund, and £18m into the business' UK Income fund.
The trust also intends to invest £10m into MAM global equity funds "in due course".
MAM has made big strides in the UK fund management arena in recent years, with funds such as UK Equity and the now soft-closed Tortoise portfolio growing rapidly on the back of strong performance.
By contrast, the trust's portfolio has struggled in recent years, and trades on one of the widest discounts in the investment trust universe. The trust's discount to NAV was 22.3% as of this morning, according to Winterflood.
The changes will also see the trust rebase its dividend, having been making payouts from company reserves in recent years in the hope Javelin would provide a fresh income stream in future.
The board now expects underlying dividends of, in aggregate, 7.5p per share for the financial year ended 30 September 2014. Total dividends per share for 2013 stood at 10.5p.
In addition to winding up Javelin, the EM boutique Majedie launched in 2010 and in which it still has a 75% stake, the trust will also lower its stake in MAM as part of the deal.
MAM has agreed to repurchase 10% of its share capital from Majedie, bringing the latter's holding in the employee-owned business down to 18%. Majedie has also agreed to reduce its stake by a further 2.5% per annum over the next four years.
That sale of the initial 10%, to be made on or by 31 March this year, will provide Majedie with the £18m it intends to invest in MAM's UK Income fund.
"The fact we have been able to structure the agreement in a manner that provides Majedie Investments and MAM with a manageable strategy for realising our investment stake in MAM will benefit both organisations," said Majedie chairman Andrew Adcock.
"[MAM] has expanded its asset management capabilities into new areas such as overseas equities, income funds and absolute return.
"Consequently, this provides the opportunity for Majedie Investments to benefit from MAM's proven asset management skills, while still maintaining the company's exposure to an appropriate range of investment specialisations."
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