Morning briefing: Universal Music rejects Pershing Square’s £48bn bid; JPMorgan Japanese trails value rally; SOHO fund manager Adrian D’Enrico leaves Atrato; Two GRIO directors quit; Litigation Capital Management warning

Universal Music Group (UMG) has rejected the $64.3bn (£48bn) takeover offer made by Bill Ackman’s Pershing Square Capital Management two months ago. The US-focused but Euronext Amsterdam listed business said on Friday evening that Pershing Square’s proposed merger with its New York listed special purpose vehicle SPARC Holdings was “not in the best interests” of the company and that the offer of €9.4bn in cash and 0.77 new UMG, or SPARC, shares for each UMG shares “fundamentally and materially undervalues” Universal. There has been no response from Ackman or Pershing Square, which manages the London-listed Pershing Square Holdings (PSH) in London and Pershing Square USA (PSUS) which listed in New York last month. PSH shares dipped 0.9% to £40.84 this morning and UMG slipped 2% to €19.10.

JPMorgan Japanese (JFJ), the UK’s biggest Japan investment trust, grew just 2% in the six months to 31 March, underperforming the TOPIX index which returned 6.7% in sterling. However, interims show the £1.2bn listed fund run by Nicholas Weindling, Miyako Urabe and Xuming Tao at JP Morgan Asset Management, returned 24.5% over 12 months, ahead of the benchmark’s 23.4%.

QuotedData senior analyst Matthew Read said: “JPMorgan Japanese’s short-term performance has been held back by the market’s continued rotation into value, with the trust’s quality-growth bias lagging a strong TOPIX. That is disappointing, but the longer-term record remains solid, with the trust ahead of the benchmark over one, three and ten years.

“More importantly, the investment case for Japan remains intact. Corporate governance reform, rising buybacks, improving returns on equity, wage growth and renewed foreign interest remain powerful tailwinds. JFJ’s managers are also positioning the portfolio for structural themes such as AI, automation and defence spending, while remaining alert to areas where AI could disrupt software business models.

“Japan has already re-rated materially, but if governance reforms continue to drive better capital allocation and shareholder returns, there should still be plenty for active managers to exploit.”

Social Housing REIT (SOHO) says Adrian D’Enrico, managing director at its fund manager Atrato Partners, is leaving the business which replaced Triple Point in September 2024. News of the departure came as the £285m investment trust announced a floating rate £30m debt facility with Barclays Bank comprising of a £25m three-year revolving credit facility priced at1.75% above SONIA, the overnight banking rate, and a £5m fixed 12-month loan at 1.80% above SONIA. The board also declared a first quarter dividend of 1.4475p per share and said it was targeting a total payout for this year of 5.79p. 

QuotedData’s Matthew Read said: “Given the difficult period that SOHO and the wider supported housing sector have been through, investors will inevitably look closely at any senior change at the investment manager and Adrian D’Enrico’s departure from Atrato is no exception. However, the company continues to be supported by Atrato’s wider team, led by Michael Carey and Natalie Markham, and this looks more like a case of continuation rather than a fundamental change in direction. SOHO still needs to keep rebuilding confidence through execution but, against that backdrop, the 3% increase in the targeted dividend and the new £30m Barclays debt facility are helpful signals.”

Judith Mackenzie, chair of Ground Rents Income Fund (GRIO), has been left the investment company’s sole board member after Bill Holland and Katherine Innes Ker stepped down as non-executive directors on Friday. Shares in the £17.5m Schroders fund fell 2p to a new low of 16.2p today, extending their decline to nearly 33% this year as Mackenzie, partner and head of Downing Fund Managers, thanked the pair “for their careful navigation of the company through a time of significant regulatory and corporate headwinds”. The ground rent investor is seeking to wind up its portfolio by November 2027 when it faces a continuation vote, but has been hit by the government’s proposed £250 limit on the annual charge that leaseholders pay freeholders.

Litigation Capital Management Limited (LIT) shares were on the slide again today after the Australian legal finance provider warned of “material write-downs” to its A$9m investment in two cases where there had been “negative developments”. The company launched a strategic review last September after a string of courtroom defeats. Northleaf Capital Partners, the Canadian alternative investments group that is supporting the company, has extended its debt covenant waiver for one month to 30 June and will continue to earn 2% higher interest rate. In London, LIT shares dropped 0.9p, or 20.7%, to 3.3p, valuing the company at £3.8m. The shares have slumped 92.5% from 44p a year ago.

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