Invesco Asia Dragon Trust debuts under new ticker
Invesco Asia (IAT ) has completed its merger with Asia Dragon (DGN) with shares in the newly named Invesco Asia Dragon Trust starting to trade under the ticker IAD this morning.
Invesco Asia has acquired around £544m of assets from Asia Dragon for the issue of 142.6m new shares to Asia Dragon shareholders.
Earlier in the week, a stock market filing revealed that shareholders owning almost 70% of Asia Dragon had voted to take their money out rather than merge with Invesco Asia.
Just 31% of Asia Dragon shareholders voluntarily opted to roll over into Invesco Asia. Investors representing 107m shares, or 69% of the £661m Abrdn-run fund selected the cash option, making it heavily oversubscribed.
However, the Asia Dragon board limited the cash offer to 25% of the shares in issue meaning the excess was scaled back on a pro-rata basis, with 75% of the shares rolled over into the newly named Invesco Asia Dragon Trust.
The trusts had a number of common shareholders, including City of London Investment Management, which was the largest shareholder in both, owning 30% of Asia Dragon and 21% of Invesco Asia, and had backed the merger.
The merger of the two trusts has created an Asian equity powerhouse, which is expected to be eligible for the FTSE 250 index and possess improved secondary market liquidity.
Invesco Asia managers Fiona Yang and Ian Hargreaves will run the enlarged fund.
Asia Dragon may have been the largest investment trust in its regional sector but chose to merge with smaller, better performing Invesco Asia following a strategic review sparked by a bold merger approach from the £39m Ashoka Whiteoak Emerging Markets (AWEM ) in May.
Asia Dragon went on to hold a ‘beauty parade’ of managers where Invesco impressed with its ‘distinctive and disciplined value-oriented investment approach’.
It is no surprise that shareholders were looking for an out from Asia Dragon given the poor performance and double-digit discount.
Over three years, it was the worst performing trust in its Asia Pacific equity sector, with a net asset value (NAV) decline of 9.7% and share price drop of 10.7%. Prior to their suspension, the shares had traded at a near 10% discount. In contrast, Invesco Asia had grown its NAV by 8.4% over three years and the shares were up 11.5%.
