FRESH signs of a return to deal making in London emerged today when two of Britain’s oldest fund businesses unveiled a £5 billion merger.
Alliance Trust, around since 1888, and Witan Investment Trust, around since 1909 are to join forces.
That could be a boost to the investment trust sector in general, which is fighting for relevance in the modern investing world in which there are scores of products competing for attention.
Witan will roll its assets into Alliance to forge the deal.
The aim is to create a “one-stop shop” for retail investors to invest in global equities called Alliance Witan.
Dean Buckley, chairman of the Dundee-based Alliance, said: “Shareholders will benefit from access to the proven investment process implemented by our investment manager, Willis Towers Watson, and access to the world’s leading stock pickers.”
He said the deal is a “key milestone” for the industry. He claims it will lead to lower charges for investors.
The combined company will be big enough to get into the FTSE 100.
Alliance shares rose 0.7% to £12.10 to value it at about £3.4 billion. Witan rose 4% to 271p to give it a market capitalisation of more than £1.6 billion.
The sector has already seen consolidation, and this deal is unlikely to be the last. It is the largest so far, however.
The deal follows a strategic review in March after Witan CEO Andrew Bell announced plans to retire.
Laith Khalaf, head of investment analysis at AJ Bell, said: “This is a blockbuster merger of two of the biggest and oldest names in the investment trust world. The deal will result in lower annual charges for investors, as well as preserving the long dividend track records of both trusts. The share price of both trusts rose on the back of the news, especially Witan, which suggests the market thinks the deal provides decent value to both sets of shareholders.”
