abrdn Diversified Income and Growth

[Nocton]

abrdn Diversified Income and Growth
Current share price ~80p NAV ~110p

The proposal is to wind-down the IT, see snip below.
The first £115m returned within 6 months, then £107m between 2024 and 2027, will have returned the current share price. The remainder of the NAV ~30p to come between 2029 and 2033, if they can't sell before then which they expect to have done. [The expected IRR on these investments averages about 15%]. In the meantime one gets a dividend of ~7%, although not certain after the wind-down begins. So perhaps worth at least a short term investment, selling after the first payment is made?

Proposals for Managed Wind-Down of the Company
Following the Company's announcement of an enhanced distribution programme on 26 October 2023,
further detailed discussions with shareholders have been undertaken. In the light of the feedback
received during these conversations and the entrenched discount to net asset value ("NAV") at which
the Company's shares continue to trade, the Board has concluded that it is in the best interests of
shareholders as a whole to put forward proposals for a managed wind-down of the Company (the
"Managed Wind-Down").
Pursuant to the Managed Wind-Down, the Company proposes to conduct an orderly realisation of its
assets in a manner that seeks to optimise the value of the Company’s investments whilst progressively
returning cash to shareholders. In particular:
• the Board expects that approximately £115 million would be returned to shareholders in the first
half of 2024 at, or close to, NAV (subject to shareholder approval and the appropriate use of the
Company's distributable reserves) with further returns of cash to follow as value is realised from
the Company's private markets portfolio in a timely and efficient manner as laid out below;

See:https://www.abrdndiversified.co.uk/en-gb

Moderator Message:
Just for the sake of the readership, I've altered the title of the thread to help understanding of what it's about. - Chris

[Alaric]

So perhaps worth at least a short term investment, selling after the first payment is made?

You may find that the security cannot readily be traded once the liquidation gets underway. Watch for when they announce cancellation of the stock market listing.

[EthicsGradient]

The winding-down proposal was noted in a thread here when it appeared about a month ago: viewtopic.php?t=39575

There was about a 10% rise in share price then, but it's lost a bit since - I'd say the market has priced in what will be available from it. You'd need to analyse all its holdings (including many bonds) carefully to see how saleable, and when, they are.

It's a share that's often been talked about here, mostly as a disappointment (I, like some others, got a holding in it when Aberdeen's (UK) All-Share Index IT was merged into it, despite it being an international mixed share/bond trust; I got out a few years ago, a rare instance of me cutting losses in good time).

[gnawsome]

abrdn Diversified Income and Growth
Current share price ~80p NAV ~110p

The proposal is to wind-down the IT, see snip below.
The first £115m returned within 6 months, then £107m between 2024 and 2027, will have returned the current share price. The remainder of the NAV ~30p to come between 2029 and 2033, if they can't sell before then which they expect to have done. [The expected IRR on these investments averages about 15%]. In the meantime one gets a dividend of ~7%, although not certain after the wind-down begins. So perhaps worth at least a short term investment, selling after the first payment is made?

Hi, thank you for a very interesting post.
I hold a portion ~ have held since Feb '99.
Bought at 138p as Br Assetts and never been near that price ever since.
The prospect of 15% IRR would be attractive to me. That it is over a lengthy period and a reducing amount would hardly concern me as I am at the age of being more interested in funding possible care costs.
I think I might buy a few more...

[Nocton]

Just to be clear, gnawsome, the 15% IIR is what is shown for the final tranche of payments, I only mention it as it suggests the final amount of money to be paid is very realistic and likely to be exceeded or on the other hand sold before the investments reach maturity. Indeed, in the last 3 years the share price has fallen to a large discount to NAV, presumably as with other ITs because of the large holding of private investments. But these private investments are quite different from private equity in individual private cos. which may not deliver the promised profits.
I expect there will be a return at least of the current NAV, the only question being how long it will take and will dividends continue to be paid? We'll know more when we see the detailed document about the wind-down before the meeting to vote on the proposal.

[clissold345]

I was looking at this RNS:

https://www.investegate.co.uk/announcem ... ny/7941103

Does anyone understand the nature of the five assets in the Second Tranche? Why does the expected IRR vary so much (lowest figure is 3.30%, highest is 35.00%)? Are their current NAVs what they are likely to be worth when they mature (the expected maturity years are given in the table)?

[HillManMill]

Does anyone understand the nature of the five assets in the Second Tranche? Why does the expected IRR vary so much (lowest figure is 3.30%, highest is 35.00%)? Are their current NAVs what they are likely to be worth when they mature (the expected maturity years are given in the table)?

It may be worth going to the AGM and raising this.

[Tigger]

I think these IRRs are just from the disposals already made within each of these funds rather than the expected IRR over the whole life of the fund. So they might just be for one or two disposals and for relatively small amounts. That was the way I read it anyway. You can get some very high IRRs if an asset happens to be sold relatively quickly.

Worth asking for more detail though if someone gets the opportunity to do so.

[clissold345]

A user called skinnypope on advfn has tried to calculate the return (19th Dec 2023). His conclusion is: "Using a price of 83p (current offer as I type) then those cashflows yield 8.6% per annum". His calculation excludes dividends.