Shareholders Stymied by Slow Government Reforms

Ludicrous scaling back of orders for shares in JP Morgan Global Growth and Income Trust

JP Morgan Global Growth and Income (JGGI) is a rare example, these days, of an investment trust that consistently trades at a premium to NAV, due to its popularity. 

Due to the heavy demand for the company’s shares and its ability to deploy capital easily into some of the world’s largest and most successful businesses, the company announced a placing and retail offer for its shares. The company is to be commended for making a retail offer on the same advantageous terms as its placing. 

These offers are beneficial for both existing shareholders and those taking up the offer. They are anti-dilutive as made at a premium to NAV but advantageous for those taking up the offer as they can buy shares at a smaller premium than the shares typically trade at in the market. 

Unfortunately, the retail offer was limited to €8m, due to regulations grandfathered in via the EU Withdrawal Act of 2018 which restricts retail offers that can be made without the issuer needing to issue a costly and time-consuming fresh prospectus. It is no surprise that JGGI has today announced that “The WRAP Retail Offer has been materially oversubscribed, with orders received exceeding the €8m limit and being subject to scale back in accordance with the terms of the Fundraising.” 

Back in 2021, we applauded proposals to lift this cap. Why should there be a limit on the issue of shares in an investment trust that investors can buy in the market every day, based on existing published information? 

Last year, the government reiterated its intention to remove damaging financial services legislation resulting from the EU Withdrawal Act in the so-called Mansion House Reforms – yet there is still no sign of these reforms being enacted. 

In common with Baroness Altmann, ShareSoc calls on the government to prioritise these reforms to help revive the moribund UK stock market and especially the environment for investment trusts. 

One comment
  1. Mark Bentley says:

    My order for the stock was scaled back by ~60%, suggesting that there was demand for ~€20m of shares.

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