THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, CANADA, JAPAN, NEW ZEALAND AND THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO MAY RESULT IN THE CONTRAVENTION OF ANY REGISTRATION OR OTHER LEGAL REQUIREMENT OF SUCH JURISDICTION
25 March 2021
Gulf Investment Fund PLC
("GIF" or the "Company")
Publication of circular
The Board of the Company announces that it has today published a circular (the "Circular") in respect of the proposed programme of further tender offers to be implemented by the Company, including the Initial Tender Offer, the proposed transfer of the Company to the Specialist Fund Segment of the London Stock Exchange and the adoption of New Articles. The Circular contains a notice convening an extraordinary general meeting to be held at 11.00 a.m. on 19 April 2021 (the "Extraordinary General Meeting").
Capitalised terms and expressions shall have the same meanings as those attributed to them in the Circular.
Background
In December 2017 the Company made a number of changes, including to broaden its Investment Policy from a largely Qatar-focussed investment strategy to a broader Gulf Cooperation Council ("GCC") focussed investment strategy, in order to capture the opportunities for growth by the expanding GCC economies by investing in listed (or soon to be listed) companies on one of the GCC exchanges.
At that time, the Board made a commitment to Shareholders to implement a tender offer in 2020, formalised in the circular to Shareholders published by the Company on 23 November 2020 (the "2020 Circular"), which completed earlier this year with approximately 44 per cent. of the issued share capital being tendered. In light of the support from the balance of Shareholders, the Company and the Investment Adviser committed to implement the proposals set out below.
The Board and the Investment Adviser continue to believe the GCC offers attractive growth opportunities for investors and continue to view the future of the Company with confidence, expecting healthy growth in the region as a whole.
Since December 2017, the Company's Net Asset Value per Share has increased by 52.1 per cent., from US$1.0145 at 7 December 2017 to US$1.5427 (unaudited) as at 11 March 2021. This compares to the 28.9 per cent. increase in the Company's benchmark, the S&P GCC Index, over the same period. In addition, the Company has paid dividends totalling 12 cents per Share during the same period. Including dividends, Shareholders have enjoyed a total return of 67.2 per cent. compared to 45.6 per cent. from the S&P GCC Index. The Company's return of 67.2 per cent. compares to the peer-group's average return of 34.2 per cent. The Company's share price currently trades at a 8.0 per cent. discount to NAV.
Enhanced dividend policy
The Board has introduced an enhanced dividend policy targeting an annual dividend equivalent to 4 per cent. of Net Asset Value at the end of the preceding year, barring any unforeseen circumstances. The first semi-annual dividend for the year ended 2021 is expected to be paid in June 2021.
Cost reduction program
Effective from 1 January 2021, the fees paid to the Investment Adviser have been reduced from 0.9 per cent. of net assets to 0.8 per cent. of net assets. In addition, the annual fees paid to each Director have been reduced by 30 per cent. with effect from 1 January 2021.
Tender Offers
The Company is proposing to implement a programme of bi-annual tender offers to be launched in March and September each year, in each case for up to 100 per cent. of each Shareholder's holding of Shares as at the relevant Record Date (each a "Contractual Bi-Annual Tender Offer"), subject to a minimum size condition as described further below. Shareholders on the Register at the relevant Record Date will be invited to either (i) continue their full investment in the Company; or (ii) save for Restricted Shareholders, tender some or all of their Shares held at that date. The Directors believe that the implementation of the Contractual Bi-Annual Tender Offers should provide those Shareholders who want it with the additional liquidity they require going forward.
The Company intends to seek the requisite authorities required from its Shareholders to undertake the Contractual Bi-Annual Tender Offers at each Annual General Meeting, the 2021 AGM being the first such meeting at which such authorities will be sought, and to renew those authorities annually at each Annual General Meeting thereafter. The terms and conditions applicable to each Contractual Bi-Annual Tender Offer, if made, are set out in Part 3 of the Circular and will also be contained, along with certain other specific details in connection with the Contractual Bi-Annual Tender Offers in a given 12 month period, including all relevant deadlines, in a circular to be distributed to Shareholders accompanying the notice convening each Annual General Meeting (each such circular being an "AGM Circular").
As the 2021 AGM is expected to be convened for a date in November 2021, and following completion of the recent tender offer in January 2021, in order to be able to offer the tender offer to Shareholders in September 2021 the Company is required to convene the additional Extraordinary General Meeting to seek the authorities required to implement a first tender offer in September 2021 (the "Initial Tender Offer"). The notice convening the Extraordinary General Meeting is set out at the end of the Circular (the "Notice of Extraordinary General Meeting").
As it would not be in the interests of Shareholders to be invested in a sub-scale illiquid fund, the Company shall not be obliged to proceed with any Tender Offer where the Directors, in their sole discretion, believe the result of the Tender Offer would reduce the Company to such a size that it would no longer be fit for purpose (the "Minimum Size Condition"). The Minimum Size Condition in respect of the Initial Tender Offer shall be a post Initial Tender Offer share capital of not less than 38,000,000 Shares (the "Initial Tender Offer Minimum Size Condition"). In the event that applications are received in respect of the Initial Tender Offer such that the number of Shares remaining in issue following completion of the Initial Tender Offer will be less than 38,000,000 Shares, meaning that the Initial Tender Offer Minimum Size Condition could not be met, the Initial Tender Offer shall not proceed. The Company will announce via a Regulatory Information Service on the relevant Confirmation Date whether the Initial Tender Offer Minimum Size Condition has been met and, accordingly, whether the Initial Tender Offer will proceed.
A Minimum Size Condition will be set in respect of each Tender Offer. In the event the Minimum Size Condition is not met in respect of any Tender Offer, that Tender Offer will not proceed. The Directors will instead put forward proposals to Shareholders for the Company to be wound up with a view to returning cash to Shareholders or to enter into formal liquidation. The Company will announce via a Regulatory Information Service on the relevant Confirmation Date whether or not the relevant Tender Offer will proceed.
The process for inviting Shareholders to participate in a Tender Offer (including the Initial Tender Offer in due course) and announcing, among other things, the relevant Minimum Size Condition and the determination of the relevant Tender Price for such Tender Offer is set out in the Circular.
Shareholders should note that completion of the Initial Tender Offer is conditional on, inter alia, the Initial Tender Offer Resolution and the Whitewash Resolution to be proposed at the Extraordinary General Meeting being passed. Completion of any subsequent Contractual Bi-Annual Tender Offer is conditional on, inter alia, the required shareholder authorities to be proposed at the Annual General Meeting in respect of the relevant subsequent 12 month period being passed.
Panel Waiver
As at the Latest Practicable Date the Investment Adviser held 17,319,759 Shares representing 33.4 per cent. of the voting rights in the Company and has indicated to the Board that it does not intend to tender any of its Shares pursuant to the Initial Tender Offer.
Subject to the final size of the Initial Tender Offer and the other assumptions set out in Part 4 of the Circular, the Investment Adviser could hold up to 45.6 per cent. of the share capital of the Company following completion of the Initial Tender Offer, which may result in the Investment Adviser being required to make a Rule 9 Offer in cash to the remaining Shareholders to acquire their Shares pursuant to the Takeover Code.
However, the Panel has agreed to waive such obligation to make a Rule 9 Offer, subject to the approval of the Whitewash Resolution, to be proposed at the Extraordinary General Meeting, by Independent Shareholders voting on a poll. The Initial Tender Offer is conditional on, inter alia, the Whitewash Resolution being passed. The Initial Tender Offer Resolution is conditional upon the passing of the Whitewash Resolution and so will therefore have the benefit of the Panel Waiver.
The Panel Waiver obtained in respect of the Initial Tender Offer will expire at the same time as the shareholder authority sought to implement the Initial Tender Offer pursuant to the Initial Tender Offer Resolution. Until such time as the Investment Adviser's shareholding exceeds 50 per cent. of the voting rights in the Company, it is the Directors' intention to seek an annual renewal of the Panel Waiver from the Panel in respect of any obligation that may arise on a Shareholder to make a Rule 9 Offer as a consequence of the implementation of a Contractual Bi-Annual Tender Offer, the first such renewal to be sought in advance of the 2021 AGM. Subject to a further Panel waiver being obtained, the Company will seek approval of such waiver at the 2021 AGM, at the same time as seeking shareholder authority to implement the first two Contractual Bi-Annual Tender Offers for the subsequent 12 month period. Thereafter it is the Directors' intention to seek an annual waiver from the Panel (if required) and Shareholder approval of that waiver at each Annual General Meeting. However, the Directors cannot guarantee that such a waiver will be obtained or that the relevant Shareholder or Shareholders would not be required to make a general offer to the remaining Shareholders to acquire their Shares.
Proposed Cancellation and Transfer
As a result of the Company's recent tender offer, the Shares ceased to be compliant with the "public hands" requirement of the Listing Rules (which, broadly, stipulates that 25 per cent. of the shares of each class in a listed company should be held by shareholders who are neither directors nor holders who own more than a 5 per cent. holding each). This development has been notified to the FCA, who have agreed to modify temporarily the relevant Listing Rule to permit a decreased level of shares in public hands for a period up until 8 September 2021, or completion of the Proposed Cancellation and Transfer described below (whichever is the earlier). During this time the Company will continue to monitor its share register and keep the FCA informed of any relevant developments as well as working towards restoring the number of shares in public hands.
In light of this, the Board is therefore recommending the cancellation of the Shares' listing on the Premium Segment and to transfer the admission to trading of the Shares to the Specialist Fund Segment. Whilst the Premium Segment offers a highly regulated investment platform for investors, the Board has considered that the relatively high costs associated with an admission to the Premium Segment, alongside the ongoing eligibility requirements with which the Company will need to comply as the Board plans for the future of the Company, mean that an alternative listing venue for the Shares would be in Shareholders' interests.
The Specialist Fund Segment is a dedicated market for specialist closed ended investment funds targeting institutional, professional and knowledgeable investors (including those who are professionally advised) who understand, or have been advised of, the potential risk of investing in companies admitted to the Specialist Fund Segment. There can be no assurance that an active or liquid trading market for the Shares will develop or, if developed, that it will be maintained following the Company's admission to the SFS. As such, a Shareholder's ability to sell Shares in the market may be restricted once the Shares are admitted to the SFS. In particular, retail Shareholders should consider whether the SFS will provide the liquidity they may require and whether to sell their Shares prior to the Company's transfer to the SFS. Shareholders will also have the ability to tender Shares and exit their investment in the Company pursuant to the Tender Offers. Shareholders who are in any doubt as to the action they should take should consult an appropriate independent professional adviser.
The SFS has been designed to suit a range of highly specialised funds, including private equity funds, feeder funds, hedge funds, both single and multi-strategy, specialist geographical funds, funds with sophisticated structures or security types, specialist property funds, infrastructure funds, sovereign wealth funds and single strategy funds.
The proposed transfer to the Specialist Fund Segment will require the cancellation of the existing listing of the Shares on the Premium Segment and to trading on the Main Market and an application for admission of the Shares to trading on the Specialist Fund Segment.
Under LR 5.2.5 of the Listing Rules, the cancellation of the Company's admission to the Premium Segment of the Official List requires the Company to obtain the prior approval for such cancellation of not less than 75 per cent. of all independent Shareholders who vote in person or by proxy at a general meeting. Therefore, the Proposed Cancellation and Transfer Resolution being proposed at the Extraordinary General Meeting to approve the Proposed Cancellation and Transfer is being proposed as a special resolution and will be carried out by way of a poll.
If the Proposed Cancellation and Transfer Resolution is passed, the Board proposes to make an application to the FCA and the London Stock Exchange respectively for the cancellation of the Company's listing on the Premium Segment and its trading on the Main Market and an application to the London Stock Exchange for admission of the Shares to trading on the Specialist Fund Segment. It is expected that the last day of dealings in the Shares on the Main Market will be 18 May 2021 and the Proposed Cancellation and Transfer will take effect at 8.00 a.m. on 19 May 2021, being not less than 20 Business Days from the passing of the Proposed Cancellation and Transfer Resolution. Accordingly, admission of the Shares to trading on the Specialist Fund Segment is expected to take place, and dealings in Shares are expected to commence on the Specialist Fund Segment, at 8.00 a.m. on 19 May 2021.
Once admitted to trading on the Specialist Fund Segment, the Company will no longer be required by the Listing Rules to ensure that 25 per cent. of the Shares are publicly held (as defined by the Listing Rules) at all times, however there is still a requirement to meet the eligibility criteria in the Admission and Disclosure Standards applicable to Specialist Fund Segment, including maintaining an appropriate level of Shares in public hands.
New Articles
At present, pursuant to the Existing Articles a continuation vote is required to be held at the 2021 AGM. In light of the proposed Initial Tender Offer and introduction of the Contractual Bi-Annual Tender Offers, the Board has already indicated that it proposes to defer the continuation vote to 2023.
The details of the continuation vote will otherwise remain unchanged, requiring the Company to propose an ordinary resolution that the Company continues in existence to be put forward at the end of the Annual General Meeting to be held in 2023. In the event that the continuation resolution is not passed the Directors will be required to put forward proposals to Shareholders to the effect that the Company be wound up, liquidated, reorganised or unitised. If the continuation vote is passed, notwithstanding the implementation of the Contractual Bi-Annual Tender Offers or any additional discount and liquidity mechanisms that may be implemented by the Board, a further continuation vote will be proposed at every third Annual General Meeting thereafter.
A special resolution to adopt the New Articles will be proposed at the Extraordinary General Meeting (the "New Articles Resolution").
Extraordinary General Meeting
The Extraordinary General Meeting has been convened for 11.00 a.m. on 19 April 2021 to take place at the offices of the Company's Administrator, Mainstream Fund Services (IOM) Limited, at Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB. At the Extraordinary General Meeting, Shareholders will be asked to consider and, if thought fit, pass the following Resolutions:
Whitewash Resolution
The Whitewash Resolution is an ordinary resolution to be taken on a poll by the Independent Shareholders to waive the obligation on the Investment Adviser which would otherwise arise under Rule 9 of the Takeover Code as a result of the implementation of the Initial Tender Offer. The Investment Adviser has undertaken not to vote on the Whitewash Resolution.
Initial Tender Offer Resolution
The Initial Tender Offer Resolution, which is conditional on the Whitewash Resolution, the Proposed Cancellation and Transfer Resolution and the New Articles Resolution being passed, is an ordinary resolution requiring, on a show of hands, more than 50 per cent. of Shareholders voting to vote in favour of the Initial Tender Offer Resolution in order to be passed or, on a poll, votes in favour of the Initial Tender Offer Resolution to be cast by holders of more than 50 per cent. of the Shares that are voted on the Initial Tender Offer Resolution.
Proposed Cancellation and Transfer Resolution
The Proposed Cancellation and Transfer Resolution will be proposed as a special resolution. As the Investment Adviser holds 33.4 per cent. of the Shares, the Proposed Cancellation and Transfer Resolution requires a majority of the votes attaching to the Shares of Shareholders who are independent of the Investment Adviser to be voted, whether in person or by proxy, in favour of the resolution in order for it to be passed. Voting on the Proposed Cancellation and Transfer Resolution will be undertaken by way of a poll.
New Articles Resolution
Subject to the passing of the Whitewash Resolution and the Initial Tender Offer Resolution, the New Articles Resolution will be proposed as a special resolution requiring not less than 75 per cent. of Shareholders voting to vote in favour in order to be passed or, on a poll, votes in favour to be cast by holders of not less than 75 per cent. of the Shares which are voted on the resolution.
Irrevocable Undertaking
The Investment Adviser has provided an irrevocable undertaking to the Company that for so long as it holds the right to exercise voting rights attaching to 30 per cent. or more of the issued share capital of the Company it shall exercise such voting rights in favour of any resolution proposed in order to give effect to the Contractual Bi-Annual Tender Offers. Accordingly, the Investment Adviser will vote in favour of the Initial Tender Offer Resolution at the Extraordinary General Meeting. The Investment Adviser will not be permitted to vote on the Whitewash Resolution and has undertaken to the Company that it will not do so.
Expected Timetable of Principal Events
| Latest time and date for receipt of Forms of Proxy in respect of the Extraordinary General Meeting | 11.00 a.m. on 17 April 2021 |
| Extraordinary General Meeting | 11.00 a.m. on 19 April 2021 |
| Results of Extraordinary General Meeting announced(¹)
| 19 April 2021 |
|
|
|
| Proposed Cancellation and Transfer |
|
| Expected date on which the Proposed Cancellation and Transfer will become effective(²) | 19 May 2021 |
|
|
|
| Initial Tender Offer |
|
| Tender Offer Announcement in respect of the Initial Tender Offer | September 2021 |
Notes:
(¹) If the Whitewash Resolution is not passed at the Extraordinary General Meeting the Initial Tender Offer will not proceed and the Company will make a further announcement on alternative proposals.
(²) Assuming the Proposed Cancellation and Transfer Resolution is passed at the Extraordinary General Meeting the Company will give at least 20 Business Days' notice by an announcement via a Regulatory Information Service of the date that the Proposed Cancellation and Transfer will become effective, the earliest possible date on which the Proposed Cancellation and Transfer can become effective being 19 May 2021.
Each of the times and dates in the expected timetable may be extended or brought forward without further notice. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service provider.
All references to times are to London times.
A copy of the Circular will shortly be available for inspection on the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and is available for download from the Company's website www.gulfinvestmentfundplc.com/publications.
Legal Entity Identifier: 2138009DIENFWKC3PW84
For further information:
Nicholas Wilson/David Humbles +44 (0) 1624 692 600
Gulf Investment Fund plc
Ian Dungate/Suzanne Jones +44 (0) 1624 692600
Mainstream Fund Services (IOM) Limited
Sapna Shah/Alex Collins/Atholl Tweedie +44 (0) 20 7886 2500
Panmure Gordon
William Clutterbuck +44 (0) 20 7379 5151
Maitland
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