Pacific Horizon promises 25% tender offer if future returns disappoint 

Baillie Gifford’s Pacific Horizon (PHI ) has proposed a new performance-triggered tender offer, following underwhelming half-year results. 

The £491m trust, managed by Roderick Snell and Ben Durrant, has revealed plans to let investors tender up to 25% of the shares in 2030 should the portfolio lag the benchmark over the next half decade.

Conditional on the trust’s net asset value (NAV) total return underperforming the MSCI All Country Asia Ex-Japan index in the five years to end of March that year, investors will be able to cash in their holdings at ‘a price near to NAV’.

In an announcement today, the board said it ‘has confidence’ the tender will not be necessary, citing PHI’s outperformance over the last five-year period of 74.5% compared to the benchmark. 

Over the past three years to yesterday, however, in a difficult climate for growth trusts in the Asia region, the trust’s portfolio is down 17.2%, underperforming the index by more than 20%.

Including dividends reinvested, the shares are actually down closer to 25%, as the trust has slipped to an 8% discount, according to Deutsche Numis data. 

Pacific Horizon has suffered in recent years for its underweight to several exceptionally performing stocks. Last year that included regional giant Taiwan Semiconductor Manufacturing Company, which has since been raised to an around 8% position in the trust.

Chinese banks have been another example, with Chinese financials in aggregate shooting up about 30% in 2024 as the government bolstered the economy and property sector with a stimulus package. 

Irrespective of the tender, PHI’s board said it would continue to buy back shares to target a single-digit discount below 10%.