Numis analyst Ewan Lovett-Turner has said European Opportunities (EOT ) faces ‘existential issues’, as the investment trust publishes further details on a new tender offer. 

The offer, announced in February, is for up to 25% of the share capital at a 2% discount to net asset value (NAV). It will be open to shareholders on the register at the end of 17 June, it was confirmed today. 

The Numis view is that many shareholders will take up their entitlement ‘given the poor performance of the fund’, even after the recent narrowing of the discount, which currently sits at 7%.

The £558m Alexander Darwall-run trust has underperformed its benchmark, the MSCI Europe Index, over one, three, five and 10 years and, as Lovett-Turner noted, ‘faces the additional challenge’ of ‘featuring a significant amount of value-oriented investors’ on its register. 

While EOT remains a ‘meaningful size’, with a nearly £600m underlying portfolio, the risk is that such investors continue to push for returns of capital close to NAV – which could eventually push the trust to a sub-scale level. 

In October 2023, the trust faced pressure from US activist Saba, which now owns a 4.4% stake, when it publicly opposed a previous 25% tender offer, labelling it ‘woefully insufficient’. It is unclear whether Saba continues to engage with EOT.

Other ‘value-oriented investors’ investors known to engage in activist activity which hold shares in the trust include 1607 Capital Partners (11.9%), Allspring Global Investments (11%) and City of London Investment Management (5.6%), according to Refinitiv data.

Darwall, meanwhile, has recently been upping his holding – being the third largest investor at present with a 6.7% stake – while members of his family have also been buying shares. 

Lovett-Turner concluded that ‘a significant turnaround in performance is required’ from the trust ahead of its continuation vote in 2026, albeit ‘small green shoots’ amid recent market volatility have given cause for some hope. The trust’s NAV total return has beaten the index since ‘liberation day’ – the Trump admnistration’s original tariff announcement on 2 April – at 5.8% versus 3.4% for the MSCI Europe.

Today’s announcement also stated that the trust’s existing performance-triggered tender offer will remain in place – for 25% of share capital at a 2% discount, should the NAV total return not exceed the index over the three years to 31 May 2026, as is the case so far. 

The board has also committed to use buybacks to maintain a single digit discount and, alongside the tender offer, will seek to renew its authority to purchase up to 15% of the shares.