Shareholders owning almost 60% of European Opportunities Trust (EOT ) have voted to sell their shares in an oversubscribed tender offer as manager Alex Darwall faces pressure to improve performance ahead of another continuation vote and performance-related tender in three years time.

Stock exchange filings show investors owning 20.2% of shares opted to particpate in the 25% basic entitlement for the tender, with a further 37.1% of shares tendered through excess applications. 

Participating investors will receive 2% below net asset value (NAV) at the time of the announcement in November, or 918p. Those who elected to tender more than a quarter of their position will see a further 12.8% of shares returned, totalling a maximum of 34.6%.

Proceeds are expected to be paid on 5 February.

Given the narrowing of the discount in recent months, most likely triggered by the offer, those tendering will crystallise a 5% gain, while remaining shareholders will benefit from a 0.67% uplift in NAV per share.

Chair Matthew Dobbs said the tender had been taken up in full by both retail and institutional investors, with 38% of registered shareholders participating.

The largest investors include bargain hunters Saba Capital, 1607 Capital, Allspring and City of London, which have respective positions of 8.8%, 13.1%, 12%, and 6.1%.

Retail investment platform Hargreaves Lansdown makes up 8.4% of the register, according to Bloomberg data.

Dobbs added that the European equities trust will retain scale and liquidity, with net assets falling from £845m to about £690m.

‘Looking forward, the board remains committed to its stated buyback policy, the primary purpose of which is to reduce discount volatility and to maintain the discount in single digits in normal market conditions,’ Dobbs said. ‘We look forward to updating shareholders on our recent performance at EOT’s forthcoming half-year results.’

The tender was introduced after 37.7% of shareholder capital voted against continuation at the AGM in November, so it is no surprise to see a large proportion vote to sell their shares given the wide discount for a couple of years, said Numis analyst Ewan Lovett-Turner.

Darwall must deliver NAV total returns ahead of the MSCI Europe index benchmark over the three years from June 2023 to 2026 to avoid a second 25% tender, with another continuation vote scheduled for the same year.

Since the start of the period, underlying returns of 10% outpace the benchmark’s 8%, according to Morningstar, while the shares have jumped 14%, benefiting from activist pressure.

Shares in the trust softened 2% to 867p in early trading on Wednesday.