Alliance Trust and Witan Investment Trust agree to merge in sector’s largest deal to date

Two massive investment trusts have agreed to the largest merger in the sector’s history, as Witan Investment Trust is set to be rolled into Alliance Trust.

Alliance is the eighth largest investment trust in the UK, and is worth about £3.4bn, with Witan being about half its size.

The merger will create an investment trust with assets under management of around £5bn, and likely push the new ‘Alliance Witan‘ trust up to the FTSE 100.

Witan began a strategic review in March after its CEO Andrew Bell announced plans to retire this year.

The company’s chair argued at the time that recent “considerable changes in markets, competition, governance and regulation” required a reassessment of the vehicle’s management. The trust has been listed on the London Stock Exchange for a century.

Both trusts take a multi-manager approach, and the two said they hoped the merger would create an “even more liquid, high-profile and cost-efficient ‘one-stop shop’ investment vehicle for global equities.”

Following the merger, the trust plans to introduce a more competitive management fee structure, which, coupled with cost savings from an enlarged portfolio, is expected to bring overall fees down.

Investment trusts have ramped up the number of mergers in the last year, as smaller trusts struggle to attract enough attention and liquidity.

“The investment trust M&A machine has been going into overdrive over the past year or so, and now we’ve got a deal that could create a new FTSE 100 member,” said Russ Mould, investment director at AJ Bell.

“Investors who want to beat the market often turn to actively managed investment funds or trusts in the hope that they will outperform. Given these fund managers are collecting an annual fee for the work, one would hope they can do better than the market, but Witan has found it hard to achieve this goal on a sustainable basis.”

“Retirement plans by Witan’s CEO Andrew Bell prompted a review of the trust and it was effectively plonked on the market with a ‘for sale’ sign, in the hope that a rival would take it over.”

Dean Buckley, chair of Alliance Trust: “The formation of Alliance Witan brings together the two leading open-architecture multi-manager investment company propositions in the UK to form a FTSE 100 equity investment vehicle with the quality, cost efficiency and profile to play a leading role in the UK investment market.

“Shareholders will benefit from access to the proven investment process implemented by our investment manager, Willis Towers Watson, and access to the world’s leading stock pickers.

“This is also a significant moment for our industry in broader terms – Alliance Witan represents a key milestone in the history of the investment trust structure which has demonstrated its capabilities very effectively over many decades.”

Andrew Ross, chair of Witan, added: “Since Andrew Bell announced his intention to retire, we have been through an extensive process to identify the best candidate to take on the management of our shareholders’ assets.

“The board assessed a number of very strong proposals, including single-manager candidates with impressive track records. However, the board was unanimous in recommending the combination with Alliance Trust, which allows the continuation of our multi manager approach at lower fees and in a larger, more liquid vehicle.”