Interactive Investor

Ex-Woodford trust seeks to change investment policy

22nd April 2022 10:03

Kyle Caldwell from interactive investor

The trust, which invests in early stage UK companies, is eyeing expanding its remit to invest globally.  

The board of the Schroder UK Public Private Trust (LSE:SUPP), formerly known as Woodford Patient Capital, is seeking to change its investment policy to invest in global businesses.

The trust, which holds £364 million of assets, invests in early stage UK companies. At the end of last year, 24 of its 35 holdings were unlisted companies.

However, the board is now proposing to remove geographic restrictions from the investment policy. It says doing so will “enable the fund managers to invest globally, and provide investors [with] access to great venture and growth companies”. In addition, the board expects expanding its remit will attract new investors, which in turn could help to reduce its large discount to net asset value (NAV). 

The proposal will be put to a shareholder vote at the company’s annual general meeting on 18 May. Shareholders can also submit proxy votes electronically ahead of the meeting.

Also on the voting agenda is shareholder approval to purchase up to 14.99% of its issued share capital. This will give the board the flexibility to buy back its own shares to tackle its wide discount, which is currently 34.1%.

In its annual results (released this week to 31 December 2021), Schroder UK Public Private Trust reported a net asset value (NAV) increase of 37.4%. The share price, however, was up just 6.3%, moving from 31p to 33.1p.

The IPO of Oxford Nanopore Technologies (LSE:ONT), which at the end of last year comprised over a third of its assets, was a key driver of performance. The IPO resulted in a gain of £104.6 million.  

As a result, its percentage weighting increased notably year-on-year, up from 16.3% at the end of 2020. The board is looking to address this by stating that “it will explore options to reduce the portfolio concentration risk over time”.

Tim Edwards, chair of Schroder UK Public Private Trust, said: “Notwithstanding headwinds, 2021 [was] a year during which the company again made good progress. The fact that this has not yet been reflected in the share price is a major focus of the board.

“The proposed change to widen our investment policy, if approved by shareholders at the AGM, will open additional exciting opportunities for our portfolio managers to explore and help to attract new investors to the company, while our greater ability to utilise share buybacks will help in reducing volatility in the discount.”

Schroders inherited the trust in December 2019 following the collapse of Woodford Investment Management. It is managed by Tim Creed and Roger Doig. 

When shareholder votes are needed

Shareholder votes are required if anything leads to “material change” to how a trust invests.

For example, if the trust invests in UK equities and will continue to invest in UK equities under new management, this will probably not be put to a shareholder vote. An example is Temple Bar (LSE:TMPL), which in September 2020 switched from Ninety One (formerly Investec) to RWC Partners.

The trust’s investment objective and strategy (of investing in UK value shares) remained the same, so the change in fund management group was not put to a vote.

However, Witan Pacific’s move to Baillie Gifford in September 2020 did require a shareholder vote owing to its strategy change. The trust formerly invested in Asia shares, but now invests exclusively in Chinese equities and its name has changed to Baillie Gifford China Growth Trust (LSE:BGCG).

Check out our beginner guide to investment trust shareholder rights to find out how else you can have your say and exert influence as an investor.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.