Consolidation across the investment trust sector continues, against a backdrop of wide NAV (net asset value) discounts, pressure on sub-scale funds and shareholder activism.

2024 proved a record year for mergers and acquisitions (M&A) across the sector, with 11 mergers and eight trusts being acquired, and this trend has continued into 2025.

On 7 February, JPMorgan Global Growth & Income (JGGI) and smaller rival Henderson International Income Trust (HINT) announced a merger which adds further scale to the former, seemingly the merger partner of choice for global income trusts having absorbed Scottish Investment Trust, JPMorgan Elect and JPMorgan Multi-Asset Growth & Income in recent years.

Due to conclude by July 2025, the deal will create a trust with net assets of roughly £3.4 billion, cementing JGGI’s position as the Association of Investment Companies’ (AIC) Global Equity Income sector big beast.

From HINT shareholders’ perspective, the deal makes sense since they will benefit from merging into a larger, more liquid vehicle which has consistently traded at a premium or close to NAV, as well as from lower ongoing charges, and there is significant overlap between HINT’s and JGGI’s top 20 shareholders. 

JPMorgan Asset Management will continue to manage the enlarged JGGI, a retail investor favourite thanks to its strong performance and attractive yield.

Deutsche Numis number-crunchers Ewan Lovett-Turner and Ash Nandi believe the tidy-up of sub-scale trusts has legs and boards will have to be more pro-active in facilitating M&A activity.

‘We believe Saba Capital’s presence should be a wake-up call to the sector and boards will need to be more proactive in managing discounts, focusing on shareholder returns and assessing the relevance of a strategy.’

Also last week (6 February), BBGI Global Infrastructure’s (BBGI) shares spiked after the progressive dividend-paying fund recommended a £1.06 billion cash offer from Canadian institutional investor BCI.

Analysts at Panmure Liberum described the bid, pitched at 147.5p per share - a premium to estimated NAV - as ‘a bolt from the blue that will reverberate around the industry’ and ‘the most significant news in several years within renewables and infrastructure funds.’

According to the broker, the deal suggests there is ‘a market for cash takeouts of project/concession-based funds on the larger end of the market cap spectrum’ and that ‘some of the discounts are too steep, or that pricing based on spreads to gilts perhaps does not entirely capture the value proposition’. 

If the boards of the largest renewable and infrastructure funds also step up efforts to narrow discounts, perhaps by adopting a more aggressive approach to disposals, this should help to bring down discounts, the analysts added.

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