Witan Investment Trust — Investors to benefit from deal with Alliance Trust

Witan Investment Trust (LSE: WTAN)

Last close As at 01/11/2024

GBP2.66

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Market capitalisation

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Research: Investment Companies

Witan Investment Trust — Investors to benefit from deal with Alliance Trust

Following a review of Witan Investment Trust’s (WTAN’s) investment management arrangements, the boards of WTAN and Alliance Trust (ATST) have announced a combination of the two companies to create Alliance Witan PLC. Witan’s board unanimously recommended the deal, which ensures the continuation of its active multi-manager approach and a broadly similar investment strategy. With combined net assets of c £5bn, significant liquidity, economies of scale and eligibility for UK 100 index inclusion, Alliance Witan will aim to deliver a real-term return over the long term through a combination of capital growth and a rising dividend. It aspires to be the UK’s leading ‘one-stop shop’ for global equity investment, at the core of retail investors’ portfolios. The combination is expected to be finalised in September or October this year, subject to shareholder approval, and should deliver what the announcement deemed ‘substantial benefits’ for shareholders of WTAN, ATST and the new Alliance Witan trust.

Joanne Collins

Written by

Joanne Collins

Analyst, Investment Trusts

Investment Companies

Witan Investment Trust

Investors to benefit from deal with Alliance Trust

Combination announcement

Investment trusts
Global equities

27 June 2024

Price

261p

Market cap

£1,569.9m

AUM

£2,011.6m

NAV/share*

283.5p

Discount to NAV*

7.9%

*At 25 June 2024.

Shares in issue

601.5m

Yield (based on forecast FY24 total dividend)

2.4%

Code/ISIN

WTAN/GB00BJTRSD38

Primary exchange

LSE

AIC sector

Global equities

Fund objective

Witan Investment Trust aims to achieve an investment total return exceeding that of its benchmark over the long term together with growth in the dividend ahead of inflation. The trust’s composite benchmark with effect from 1 January 2020 is 15% UK and 85% world (including the UK).

Analyst

Joanne Collins

+44 (0)20 3077 5700

Witan Investment Trust is a research client of Edison Investment Research Limited

Following a review of Witan Investment Trust’s (WTAN’s) investment management arrangements, the boards of WTAN and Alliance Trust (ATST) have announced a combination of the two companies to create Alliance Witan PLC. Witan’s board unanimously recommended the deal, which ensures the continuation of its active multi-manager approach and a broadly similar investment strategy. With combined net assets of c £5bn, significant liquidity, economies of scale and eligibility for UK 100 index inclusion, Alliance Witan will aim to deliver a real-term return over the long term through a combination of capital growth and a rising dividend. It aspires to be the UK's leading ‘one-stop shop’ for global equity investment, at the core of retail investors’ portfolios. The combination is expected to be finalised in September or October this year, subject to shareholder approval, and should deliver what the announcement deemed ‘substantial benefits’ for shareholders of WTAN, ATST and the new Alliance Witan trust.

For WTAN shareholders, the benefits will include an increased dividend. The second interim dividend for the financial year to 31 December 2024 (FY24) will be 1.75p (versus 1.51p previously indicated by WTAN’s board, in line with the first interim payment). The third and fourth interim dividends (payable to Alliance Witan shareholders) for FY24 are anticipated to be equivalent to 1.51p per Witan share. This represents a full year dividend of 6.28p, a 4% increase over the 6.04p WTAN paid in respect of 2023, representing a prospective yield of 2.4% based on the current share price. This would mark the 50th consecutive increase for WTAN shareholders, and the 57th for ATST investors.

WTAN investors may also benefit from the investment expertise evidenced by ATST’s strong investment performance track record: over the seven years since the appointment of Willis Towers Watson (WTW) as ATST’s investment manager in April 2017 to 31 March 2024, its NAV total return was 104.2%, versus 95.7% for its benchmark, the MSCI All Country World Index. Over the three years to end March 2024, ATST’s NAV total return was 39.7%, against a benchmark return of 33.6%. WTAN shareholders also have the option of a partial cash exit at a 2.5% discount to NAV, versus the current discount of 7.9%.

The deal also includes a new, more competitive management fee structure amounting to 0.52% on the first £2.5bn of Alliance Witan’s market capitalisation, 0.49% between £2.5bn and £5.0bn, and 0.46% on market cap above this level. The greater economies of scale derived from the larger investment vehicle will lead to lower ongoing charges, especially for WTAN’s shareholders.

The board of the new vehicle will initially comprise 10 members, include four members of WTAN’s board, and will be chaired by ATST’s chairman, Dean Buckley. WTAN’s chair, Andrew Ross, will be deputy chair. The number of Alliance Witan board members will be reduced to eight in spring 2025 at new trust’s first AGM.

General disclaimer and copyright

This report has been commissioned by Witan Investment Trust and prepared and issued by Edison, in consideration of a fee payable by Witan Investment Trust. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Witan Investment Trust and prepared and issued by Edison, in consideration of a fee payable by Witan Investment Trust. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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