Uncertainty for European Opps as Darwall moves to Liontrust in River Global takeover

Liontrust’s stable of investment trusts is set to triple after it announced the acquisition of River Global today for £9.7m, but the future of Alexander Darwall’s European Opportunities (EOT) remains uncertain.

The UK asset manager will inherit India Capital Growth (ICG) and River UK Micro Cap (RMMC) in the deal, which will sit alongside Liontrust’s only closed-end fund, Edinburgh Investment Trust (EDIN).

However EOT, which is River Global’s largest vehicle, is still evaluating its future options as part of a strategic review and may not follow Darwall to his new firm. The trust’s £400m market capitalisation dwarfs the combined £174m held in the other two funds, but is still smaller than EDIN’s £1bn in assets.

River Global’s flagship trust – which it only acquired last year as part of its takeover of Devon Equity Management – launched a strategic review last month to address its long-term underperformance, which could result in a merger with another fund or conversion into an open-ended vehicle.

Darwall’s trust is up 65.3% over the past decade, falling well short of the 150.9% return made by the MSCI Europe benchmark and 138.4% average gain from its peers in the Europe sector.

It traded on an average discount of 7.4% over the past year, which has narrowed to 4.6% since announcing the strategic review.

Having faced similar challenges, Smithson’s recent strategic review concluded that turning into an open-ended fund was the best option, removing the discount in doing so.

Regardless of European Opportunities’ decision, Panmure Liberum analyst Rae Maile said the deal would help Liontrust to ‘further diversify its business through broadening its investment capabilities, its product range and its distribution’.

Shares in River Global were up 40.7% by 13:00, with Liontrust rallying 4.9% on the news.