Abrdn New India (ANII ) is under pressure to become the fifth Abrdn trust to merge in the past 13 months as rivals circle the serial underperformer.

India Capital Growth (IGC ), a £159m better performing mid-cap fund, is understood to have made several approaches to Abrdn New India this year about combining with the £439m listed large-cap fund.

A source with knowledge of the situation said JP Morgan, whose £814m Indian (JII ) investment trust is the sector’s largest but worst-performing fund, had also shown interest in a combination with New India, which marks its 20th anniversary this year. However, it may also be looking at a merger with another JPM trust.

New India, chaired by Michael Hughes, the former Barclays Capital and BZW stockbroker, has not responded to Elisabeth Scott (pictured above), the chair of India Capital Growth. It is said to prefer an merger with stablemate Abrdn Asia Focus (AAS ), a £486m smaller companies fund run by Hugh Young until last year.

If it were to happen, a merger with India Capital Growth would put the assets of New India back within the fold of Martin Gilbert, the co-founder of Aberdeen Asset Management in 1982 who established the company as a leading investment trust provider and oversaw the launch of the single country fund in 2004.

Since stepping down as chief executive of Aberdeen following its 2017 merger with Standard Life, Gilbert (below) has led AssetCo (ASTO), a fund management consolidator. Last year it bought India Capital Growth’s investment adviser Ocean Dial Asset Management, putting it within the River and Mercantile business he bought in 2022, which has recently rebranded as River Global.

Abrdn declined to comment specifically on New India but said: ‘In these volatile markets with a dearth of IPO activity it is no surprise to see approaches across the investment company sector. Boards are often approached informally but we can’t comment on individual trusts and indeed the variability of market performance often means that any such thoughts quickly change.’

Corporate activity between investment companies has shot up in the past 18 months as boards respond to shareholder dissatisfaction at a sector-wide de-rating that has seen shares in many listed funds trade well below asset value.

India trusts

In the India sector, IGC stands on an 11% discount and ANII and JII trade on discounts of 18% and 20% below net asset value.

Ashoka India Equity (AIE ) is the only one of the four to trade on a premium of 4% above NAV. This reflects the £357m mid-cap fund’s superior performance. Under Prashant Khemka of White Oak Capital Management, it has returned 155% to shareholders over three years, beating IGC’s 78%, although its 10-year return of 313% under Ocean Dial’s Gaurav Narain (below) is the best in the sector.

JII, run by JPMorgan’s Amit Mehta and Sandip Patodia following the recent move off the trust by Ayaz Ebrahim, has returned 211% over 10 years; and ANII, managed by Kristy Fong and James Thom at Abrdn, has generated 224%. Both trail the 239% of the MSCI India index.

‘Tough’ Abrdn gig

Abrdn has been at the forefront of investment company consolidation, which is also a response to large wealth managers’ demand for larger, more liquid and cost-effective funds.

No less than 12 of its investment trusts have been involved in corporate action since the start of last year. There have been two internal mergers with Abrdn New Dawn disappearing into Asia Dragon (DGN ) and Abdrn Smallers Companies Income absorbed by Shires Income (SHRS ); and two external mergers with Abrdn Japan rolling into Nippon Active Value (NAVF ) and Abrdn China combining with Fidelity China Special Situations (FCSS ) this year.

Abrdn Property Income (API ) narrowly avoided a merger with Custodian Real Estate Income (CREI ) and is winding down, while UK Commercial Property (UKCM ) is in the process of merging with Tritax Big Box (BBOX ), also part of the Abrdn group following its purchase of Tritax Management, despite the opposition of its chair.

Multi-asset fund Abrdn Diversified Income & Growth (ADIG ) is also winding down while Abrdn European Logistics Income (ASLI ) is assessing its options having decided not to combine with Tritax Eurobox (EBOX ).

Abrdn Latin American kicked off the process with a self-liquidation announced in March last year, while Ceiba Investments (CBA ), a Cuban property fund, also left the Abrdn platform and returned to self-management.

Assuming ASLI is removed that will leave Abrdn with a dozen investment trusts, down from 19, including New India.

All this change and contraction amounts to what our source called a  ‘tough gig’ for Christian Pittard, the new head of Abrdn’s investment companies business who took over after the retirement of William Hemmings after 20 years in the job.