JPM Indian investors dash for exit in oversubscribed tender

JPMorgan Indian’s tender offer was oversubscribed, with investors tendering close to 39% of the share capital.

Investors in JPMorgan Indian (JII ) have rushed for the exit in what proved to be an oversubscribed tender offer.

Investors tendered 25.4m shares, representing 38.7% of share capital. This was above the 19.7m shares the board committed to repurchase in the offer, equating to 30% of shares.

The board said the tender price will be announced once the assets that are allocated to the ‘tender pool’ have been sold and cash has been realised. The cash exit will be close to the net asset value (NAV) of the portfolio and is expected to take place early in the third quarter.

The tender offer replaces the performance-related tender for up to 25% of shares that was due to happen in September.

The £707m trust announced the tender offer back in May as part of a raft of incentives, which also included the introduction of a dividend, to placate shareholders after a run of disappointing performance.

JPMorgan Indian also committed to narrowing the discount to single digits via buybacks.

Together, these initiatives have shrunk the discount to 9%. 

Additionally, a triennial tender offer for 100% of the shares at a 3% discount to the prevailing NAV is on the table. The first such offer will be launched in the second quarter of 2028, although directors are reserving the right to withdraw the tender if it would shrink the NAV below £150m. Instead, they would hold a continuation vote instead.

Over the past three years, JPMorgan Indian’s shares are up 40.4% which compares to a 48.6% gain by the average trust in the Association of Investment Companies’ India subcontinent sector.

The NAV total return has underperformed its benchmark MSCI India index over three and five years, as well as the year-to-date but Deutsche Numis analyst Ash Nandi said tax rates on investing in India mean the returns of the index are ‘difficult to match’.

To illustrate the difficulties India fund managers face; over five years, the benchmark has risen 115% while the corresponding tracker fund – which should match the market – is only up 85%, with JII’s NAV total return slightly behind at 82%.

Nandi said she was ‘not surprised’ by the oversubscribed tender ‘given an exit at realisable value less costs, versus an average discount of mid-teens in recent years, and the underperofrmance of the index’.