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JPMorgan Global Growth & Income to combine with SCIN

Closed-end funds and OEICs
77ss
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JPMorgan Global Growth & Income to combine with SCIN

#451508

Postby 77ss » October 20th, 2021, 8:38 am

https://www.investegate.co.uk/jpmorgan- ... 00065929P/

Merger, takeover, call it what you will. If it goes ahead it will effectively double the size of JGGI.

SCIN is a serial underperformer (5 yr TR of 19% - cf JGGI's 109%) so this is probably good news for holders.

JGGI holders (of which I am one) may be less sanguine, but some reassurance is provided by:

In order to manage the realisation and realignment of the Company's portfolio in advance of the Transaction, the Company intends to appoint JPMorgan as AIFM of the Company, and to adopt a substantially identical investment policy and investment strategy to JGGI.


https://www.investegate.co.uk/scot.inv. ... 00065996P/

monabri
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Re: JPMorgan Global Growth & Income to combine with SCIN

#451514

Postby monabri » October 20th, 2021, 8:54 am

SCIN's shareprice jumped this morning....maybe the 12 % discount to NAV will close ( cf JGGI's premium)?

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Re: JPMorgan Global Growth & Income to combine with SCIN

#451527

Postby Dod101 » October 20th, 2021, 9:34 am

It is good to see continuing activity in the IT sector but I am sorry to see that Scottish Investment Trust is to disappear, although it deserves no more as it has been a serial underperformer for many years. The arrangement sounds similar to that when Murray Income took over the assets of Perpetual Income and as a consequence was able to reduce its costs. They promise the same here.

Dod

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Re: JPMorgan Global Growth & Income to combine with SCIN

#451531

Postby baldchap » October 20th, 2021, 9:50 am

As a holder of JGGI, and ex-holder of SCIN I am still unsure how I feel about this.

I liked SCIN's 'style' and old fashioned holdings, although obviously performance was awful. Was this due to the underlying holdings or management?
The final straw was the cancellation of last years special dividend, whilst still claiming to be a dividend hero.

As 77 has said this will double the size of JGGI, and if they can make those funds perform in a similar manner to its current holdings then all should be well....shouldn't it?

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Re: JPMorgan Global Growth & Income to combine with SCIN

#451542

Postby LittleDorrit » October 20th, 2021, 10:17 am

Nasty performance fee at JGGI going, which added over 1% to costs in last financial year.

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Re: JPMorgan Global Growth & Income to combine with SCIN

#451547

Postby Wuffle » October 20th, 2021, 10:23 am

I don't own either, but I have considered JGGI as a vehicle for owning the bit of the market that isn't yield while still really wanting a yieldy portfolio.
I couldn't see past owning it through FCIT at a 10% discount and a bit of yield and even lower costs the the merged vehicle could achieve.
Overall though, I own growth and income ITs which I think could be perfect but for some scale and efficiency.
I am looking at you MATE (also J P Morgan)

W.

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Re: JPMorgan Global Growth & Income to combine with SCIN

#451596

Postby richfool » October 20th, 2021, 12:12 pm

My largest holding is JGGI (Not sure that I am keen about taking on SCIN though. Noted SCIN holds a couple of gold miners).

My second largest holding is MCT and my third largest holding is MATE.

MATE, whilst paying a c 4.00% dividend yield (OK currently 3.79%) and having an objective of being less volatile, I've found its SP does tend to suffer when the market falls.

Dod101
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Re: JPMorgan Global Growth & Income to combine with SCIN

#451602

Postby Dod101 » October 20th, 2021, 12:18 pm

richfool wrote:My largest holding is JGGI (Not sure that I am keen about taking on SCIN though. Noted SCIN holds a couple of gold miners).

My second largest holding is MCT and my third largest holding is MATE.

MATE, whilst paying a c 4.00% dividend yield (OK currently 3.79%) and having an objective of being less volatile, I've found its SP does tend to suffer when the market falls.


I would not worry about the merger. If you read the announcement, it is likely that the SCIN portfolio will be realigned to suit JGGI by the end of the year at the latest, assuming of course it all goes through. So JGGI is not 'taking on' SCIN's current portfolio but they are taking on its assets.

Dod

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457314

Postby richfool » November 11th, 2021, 1:03 pm

77ss wrote:https://www.investegate.co.uk/jpmorgan-global--jggi-/rns/proposed-combination-with-scottish-investment-tst/202110200700065929P/

Merger, takeover, call it what you will. If it goes ahead it will effectively double the size of JGGI.

SCIN is a serial underperformer (5 yr TR of 19% - cf JGGI's 109%) so this is probably good news for holders.

JGGI holders (of which I am one) may be less sanguine, but some reassurance is provided by:

In order to manage the realisation and realignment of the Company's portfolio in advance of the Transaction, the Company intends to appoint JPMorgan as AIFM of the Company, and to adopt a substantially identical investment policy and investment strategy to JGGI.


https://www.investegate.co.uk/scot.inv. ... 00065996P/

As a holder of JGGI, I've been pondering this a bit more.

I am not averse to increasing my holding of JGGI, but haven't done so because my existing holding is relatively large, is up more than 50%, and the trust trades at a premium. I have however been pondering whether it might be a cheaper or more advantageous way of doing so, to buy some SCIN and then sit and wait for the takeover/absorption to take place. Accepted that had I bought some SCIN prior to the announcement I might have benefited more significantly from the discount on SCIN, which of course has now reduced, though it still is in the order of -6% (whereas JGGI is currently trading at a premium of +1.5%).

Any thoughts anyone?

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457358

Postby bonrepos » November 11th, 2021, 3:55 pm

When I first read of this proposed merger I also thought it would be a good idea to invest in SCIN
before the merger.

My reasoning was that SCIN was then on a discount of nearly 10% and it had 2.89 years of dividend
reserve. I hoped that the discount might shrink to par to get closer to JP Morgan Growth and Income (JGGI)
premium. I also hoped that the dividend reserve might be used to pay out to existing SCIN shareholders
to encourage them to agree to the merger.

I hold a large % of my SIPP in JGGI as I like the style of investing and the dividend policy. I am also
impressed with the considerable resources of research that are available to the managers.

The other advantages are the reduction in JGGI management fees and the increased liquidity.

I hope I'm right as I bought some! But definitely do your own research.

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457374

Postby Alaric » November 11th, 2021, 4:43 pm

bonrepos wrote:I also hoped that the dividend reserve might be used to pay out to existing SCIN shareholders
to encourage them to agree to the merger.


Dividend reserve is just an accounting convention and not in any way a separate pool of money. So whilst a special dividend would no doubt be possible, it's just bribing shareholders with their own money and the likely consequence being fewer shares allocated to SCIN holders in the amalgamated share class.

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457386

Postby Dod101 » November 11th, 2021, 5:27 pm

Alaric wrote:
bonrepos wrote:I also hoped that the dividend reserve might be used to pay out to existing SCIN shareholders
to encourage them to agree to the merger.


Dividend reserve is just an accounting convention and not in any way a separate pool of money. So whilst a special dividend would no doubt be possible, it's just bribing shareholders with their own money and the likely consequence being fewer shares allocated to SCIN holders in the amalgamated share class.


I have not read the full announcement but if the same rules apply to the SCIN merger as happened with the Perpetual one with Murray Income, it is the case that the Revenue Reserve held by SCIN cannot be transferred to JGGI but must be paid out to the existing SCIN shareholders, and it is not a bribe it is just simple fact.

There is surely little in it now in buying into SCIN as the discount has largely gone.

Dod
Last edited by Dod101 on November 11th, 2021, 5:29 pm, edited 1 time in total.

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457427

Postby richfool » November 11th, 2021, 9:25 pm

So, taking the information distilled from the above posts, if SCIN has 2.89 years of dividend reserves, and the dividend reserves have to be paid out to existing shareholders, then that 2.89 years worth will have to be paid out to SCIN holders on or before the transfer to JGGI? Or am I cross-pollinating something?

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457431

Postby Dod101 » November 11th, 2021, 9:58 pm

richfool wrote:So, taking the information distilled from the above posts, if SCIN has 2.89 years of dividend reserves, and the dividend reserves have to be paid out to existing shareholders, then that 2.89 years worth will have to be paid out to SCIN holders on or before the transfer to JGGI? Or am I cross-pollinating something?


I cannot find a reference to these reserves in the announcement but that is what happened 'had to happen' according to the chairman of Murray Income when Murray bought the assets of Perpetual because I asked him why they did not take the revenue reserves over to Murray. It has left Murray Income with rather thin reserves against the new combined assets. The same thing could/should(?) happen with JGGI/SCIN but if you are relying on that as a reason to buy into SCIN now, do not rely on my comments; try to check with one or other of the Company Secretaries.

Dod

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457443

Postby Noslien » November 11th, 2021, 11:11 pm

Surely the corolloray of this is that existing reserves within JGGI belong to existing shareholders and cannot be shared with new holders transferred in?

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457477

Postby Dod101 » November 12th, 2021, 7:17 am

Noslien wrote:Surely the corolloray of this is that existing reserves within JGGI belong to existing shareholders and cannot be shared with new holders transferred in?


No That is not how it works. The JGGI shareholders are only buying the assets of SCIN, not the Company so that the existing reserves of JGGI are now left to support the combined assets. This is an almost exact parallel of the situation with Murray Income and Perpetual and I wrote to the Murray Income chairman (in which I hold shares) and asked him. He was very helpful and he explained it all to me, Neil Rogan if I remember correctly.

Dod

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457538

Postby Noslien » November 12th, 2021, 11:03 am

"The JGGI shareholders are only buying the assets of SCIN, not the Company so that the existing reserves of JGGI are now left to support the combined assets."

I am sure that this is technically correct, but that doesn't make it good news. The Directors need to explain why this is attractive to current JGGI shareholders.

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457544

Postby Alaric » November 12th, 2021, 11:20 am

Noslien wrote:"The JGGI shareholders are only buying the assets of SCIN, not the Company so that the existing reserves of JGGI are now left to support the combined assets."

I am sure that this is technically correct, but that doesn't make it good news. The Directors need to explain why this is attractive to current JGGI shareholders.


I see from the announcement
The Proposals will be subject to the approval by the shareholders of both JGGI and SCIN in addition to regulatory and tax approvals. A timetable and further details of the Proposals will be announced in due course.


Hopefully the Proposals will clarify whether the combined entity is just the sum of its parts, including historic accounting such as mow much of the net assets are represented by Income reserves.

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Re: JPMorgan Global Growth & Income to combine with SCIN

#457592

Postby Noslien » November 12th, 2021, 1:23 pm

A key question for me is why is this arrangement better for current JGGI shareholders than a rights issue?. Seems to me the winners in this situation will be SCIN shareholders and JPM (even without a performance fee they will be better off). I don't see the built in benefits.

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Re: JPMorgan Global Growth & Income to combine with SCIN

#481822

Postby richfool » February 21st, 2022, 9:12 am

FWIW I bought some SCIN back in January's falls, on the basis that I would ultimately be topping up JGGI, (at a future point in time, when perhaps their SP might have fallen due to tech stock falls), and I would in the meantime be taking advantage of SCIN's exposure to gold miners, big oil and value stocks. A side door route into JGGI.

SCIN has been doing well recently.

https://thescottish.co.uk/wp-content/up ... -of-GM.pdf

https://www.hl.co.uk/shares/shares-sear ... -25p-share


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