Gulf Investment Fund (GIF) has announced that its 100% tender offer, which was launched on 21 August 2024 (click here to see our coverage), has received irrevocable commitments that would push it below its minimum size condition (this being that GIF must retain a post tender offer share capital of not less than 38m Shares). As a result, the tender offer will no longer proceed and, instead, GIF’s board will now put forward proposals to shareholders for it to be wound up with a view to either returning cash to shareholders or to enter into a formal liquidation (this is in accordance with tender terms and conditions set out in GIF’s circular dated 28 November 2023). GIF says that it will publish a circular as soon as practicable, setting out details of the board’s proposals and to convene a general meeting at which approval for the proposals will be sought from shareholders.

[QD comment: Unfortunately, given how tightly GIF’s shares are held and the fact that the last tender offer left GIF very close to its minimum size condition, this latest development doesn’t really come as a surprise. We think this is a shame as GIF offers a unique exposure in the closed ended space (the rapidly growing companies in the middle east) and, reflecting this, it has performed very strongly – it has beaten the equivalent open ended funds, which are difficult for the majority of smaller investors to access as well. In a different environment, we would have expected to see GIF trading at a decent premium, issuing stock and growing, with all the benefits that increased scale and greater liquidity can bring. Instead, it is being forced to throw in the towel and investors will lose a compelling option as a result. There’s little doubt that GIF’s size hasn’t helped in an age where consolidation within the wealth management industry means that ever larger fund sizes are required – once again it is the underlying clients that tend to lose out – and the cost disclosure issue has weighed on it as well as it has for all closed ended funds – albeit smaller funds, such as GIF find themselves at the sharper end of this. Given its proposition, performance and the fact that the cost disclosure issue could be brought to a resolution, we think there could be value in shareholders voting for continuation. If the fundraising window were to re-open a crack, we think GIF could do well.]