Witan Pacific change and tender offer

[GJHarney]

Following the announcement in July that Baillie Gifford were taking over Witan Pacific and totally remaking it into a unlisted China conviction growth fund with a concentrated portfolio, Witan have now opened a tender offer to buy back shares without dealing cost at NAV less 1% for those that don't want to stick around.

On the face of it that isn't a bad offer (if the 24 million shares allocated as being availabkle to buy of owners want to sell is enough) given that the current NAV discount is a tad over -3% (-7.61% avg over the past 12 mths).

I like BG, hold a lot of their IT's, am generally happy with the performance and management of all of them. But... I got WPC to begin with to invest in a basket Asian stocks which included Japan, not a single country unlisted conviction fund. Yes, BG China Growth (as I think it'll be now called) could do very well indeed - BG have a China based office and a good recent track record there, but it will also I am assuming be a high risk fund, far higher than what it replaces.

So I've opted to sell 100% of my WPC holding on my platform but will watch the new fund when it gets going with interest.

What are other WPC investorts on here doing?

[yyuryyub]

I think your analysis is a very good one. It's a big change of mandate, so it depends on how the new trust will (in due course) fit in with an investors portfolio and aims. If they find the Chinese investment equivalent of Tesla, wonderful. I've been undecided, but think I'll ignore the tender and accept the change of gameplan.

[Dod101]

I do not think that the new mandate is for unlisted China stocks. In fact it is not, because they hold Ping An Insurance which is a listed public company and nor have they said that it is investing in China only; what they have said is that it will be invested predominantly in China, not quite the same thing. Isn't the tender offer for up to 40% of the existing shares and so if you tender 100% you will only have full take up if other shareholders do not?

I am wondering whether to invest and I think I may take a small holding since BG are well represented in China and they are growth oriented above all.

Dod

[SoBo65]

I do not think that the new mandate is for unlisted China stocks. In fact it is not, because they hold Ping An Insurance which is a listed public company and nor have they said that it is investing in China only; what they have said is that it will be invested predominantly in China, not quite the same thing. Isn't the tender offer for up to 40% of the existing shares and so if you tender 100% you will only have full take up if other shareholders do not?

I am wondering whether to invest and I think I may take a small holding since BG are well represented in China and they are growth oriented above all.

Dod

I agree, and have recently bought into WPC due to the involvement of BG, I like the sound of a concentrated portfolio of predominantly Chinese shares.

[jonesa1]

I do not think that the new mandate is for unlisted China stocks. In fact it is not, because they hold Ping An Insurance which is a listed public company and nor have they said that it is investing in China only; what they have said is that it will be invested predominantly in China, not quite the same thing.

This summarises their intentions: https://www.bailliegifford.com/en/uk/in ... 70?p=24349

Looks like 100% China to me and with the option of unlisted companies.

"In September 2020, we became investment managers for what was the Witan Pacific Investment Trust, following the decision by the board to appoint us. Our radical proposition was simple – to refocus the trust away from the broad Asia Pacific region, and instead focus it solely on the most important, and arguably most exciting market of the coming decades: China.
Consequently, the trust has been renamed as Baillie Gifford China Growth Trust plc, and the portfolio invested into the 40-80 Chinese companies which we believe are most likely to deliver outstanding growth over the next five to 10 years. The portfolio is similar to our highly regarded Baillie Gifford China Fund. However, the trust will have the added advantage of financial gearing and being able to invest into smaller cap and unlisted companies, the latter of which are becoming an ever more important investment opportunity in China."

[Dod101]

So? As far as Chinese shares are concerned, I am only quoting their website. With respect, I suggest that you take a look at it..

Dod

[UncleEbenezer]

I tendered 40%. Happy to hold (I think), but I already have some significant exposure to China, and that 40% can be reinvested back into the rest of Asia-Pacific, which Witan Pacific hitherto gave me.

The new focus looks like an overlap with other China funds, like the Fidelity FCSS. Not to mention (possibly) my seriously overweight holding in Scottish Mortgage.

[jonesa1]

So? As far as Chinese shares are concerned, I am only quoting their website. With respect, I suggest that you take a look at it..

Dod

From where do you think I copied the quoted text? The included URL offers a big clue.

[Dod101]

So? As far as Chinese shares are concerned, I am only quoting their website. With respect, I suggest that you take a look at it..

Dod

From where do you think I copied the quoted text? The included URL offers a big clue.

No need to be snarky. I copy below the first thing after the usual Disclaimer which you will find on the newly revamped website.

OVERVIEW
Baillie Gifford China Growth Trust aims to produce long term capital growth by investing predominantly in shares of, or depositary receipts representing the shares of, Chinese companies.

Dod

[everhopeful]

I think Jonesa1 was on the receiving end of snark first and his quote from the website is all one needs to understand the intentions of BG in this trust.
It is perhaps of relevance that the other ITs investing in China can be bought at a discount to NAV. Fidelity is at 6% discount at the moment. I am tempted to back BG however.

[Dod101]

I suspect that the Covid business is getting to all of us and frankly it does not matter whether they invest 'predominantly' in China or wholly in China but the website contradicts itself.

I expect to buy into it shortly, preferring BG's growth story.

Dod

[GJHarney]

Thinking about this a bit more I'm guessing that BG may broadly be looking to develop this new China Growth IT in a similar relationship with their existing China fund as exists between BG's Japanese and Shin Nippon funds with China Growth following the smaller/unlisted strategy of Shin.

That has certainly played well in Japan with both BG funds there being among the most successful, but China has far more uncertainty and political (inc geoploitical) risk I think which means they would not currently be a similar risk profile.

Witan's Pacific Assets would have been a far closer shoe-in with BG's existing Pacific Horizon IT, but I guess doing it this way gives China Growth an immediate wedge of capital and investors at launch, although it is such a different fund and risk from Pacific Assets that I think there are some ethical considerations for smaller investors that come into play (and that I don't think have been properly explained by BG if I'm being honest).

BG's track record vbeing what it is the new fund has every chance of success, but it is still something I want to wait to see how it develops for a while and not take a chance of possibly wide discounts to NAV issues (and looking at my AJ Bell account yesterday it looks like all my courrent holding has been taken up by the tender so I'll be looking at something new to direct that cash to).

[midgesgalore]

I expect I will buy into the Baillie Gifford China Growth Trust plc (BGCG).
Baillie Gifford have done well recently with their Pacific Horizon trust and they say they have opened one other satellite office outside Edinburgh and that is in China (a research office in Shanghai).
I watched their video and the two managers seem to believe China is the biggest medium term growth opportunity and will challange, maybe outgrow, USA - at least my interpretation.
https://www.bailliegifford.com/en/uk/individual-investors/funds/baillie-gifford-china-growth-trust/ic-video/2020-q3-baillie-gifford-china-growth-trust-ind-we-1762?p=24349
It only lasts 10 minutes

So I will be looking over the paperwork a bit more, doing my due diligence.
If they do as well with BGCG as they have done with the other three of their trusts in which I have invested, Scottish Mortgage, USA growth & Monks then I will be as pleased as a pleased person being pleased .... (Blackadder I think)

midgesgalore

[jonesa1]

I looked at this trust originally because I liked the fact that it invested across the region, including Japan, and performance wasn't that bad. The change to BGCG turns it into an entirely different fund, more risk, but possibly a good chance of outperformance. The change of manager has already eliminated the discount, presumably investors (including me) hoping BG will work the same magic they did with the US, Pacific Horizon and Europe. I do find it baffling that there are no other trusts with the same wide remit as WPC used to have.

https://www.poetryfoundation.org/poems/ ... -the-snark

[Dod101]

I expect I will buy into the Baillie Gifford China Growth Trust plc (BGCG).
Baillie Gifford have done well recently with their Pacific Horizon trust and they say they have opened one other satellite office outside Edinburgh and that is in China (a research office in Shanghai).
I watched their video and the two managers seem to believe China is the biggest medium term growth opportunity and will challange, maybe outgrow, USA - at least my interpretation.
https://www.bailliegifford.com/en/uk/individual-investors/funds/baillie-gifford-china-growth-trust/ic-video/2020-q3-baillie-gifford-china-growth-trust-ind-we-1762?p=24349
It only lasts 10 minutes

So I will be looking over the paperwork a bit more, doing my due diligence.
If they do as well with BGCG as they have done with the other three of their trusts in which I have invested, Scottish Mortgage, USA growth & Monks then I will be as pleased as a pleased person being pleased .... (Blackadder I think)

midgesgalore

BG have had an office in Shanghai for some years and recently they added a trader to it (rather than just being a research office as you put it) They also have offices in the US I think and have opened one in the EU which I think might be in Dublin.

Dod

[midgesgalore]

I expect I will buy into the Baillie Gifford China Growth Trust plc (BGCG).
Baillie Gifford have done well recently with their Pacific Horizon trust and they say they have opened one other satellite office outside Edinburgh and that is in China (a research office in Shanghai).
I watched their video and the two managers seem to believe China is the biggest medium term growth opportunity and will challange, maybe outgrow, USA - at least my interpretation.
https://www.bailliegifford.com/en/uk/individual-investors/funds/baillie-gifford-china-growth-trust/ic-video/2020-q3-baillie-gifford-china-growth-trust-ind-we-1762?p=24349
It only lasts 10 minutes

So I will be looking over the paperwork a bit more, doing my due diligence.
If they do as well with BGCG as they have done with the other three of their trusts in which I have invested, Scottish Mortgage, USA growth & Monks then I will be as pleased as a pleased person being pleased .... (Blackadder I think)

midgesgalore

BG have had an office in Shanghai for some years and recently they added a trader to it (rather than just being a research office as you put it) They also have offices in the US I think and have opened one in the EU which I think might be in Dublin.

Dod

Dod, one of the two managers in the video, Roderick Snell, makes a point in the first minute that the only research office BG have opened up outside Edinburgh in the last 110 years is Shanghai last year.
Perhaps the small print is this is specifically a research office and I accept I might not have paraphrased that accurately. I can be guilty of that.

Instead of:

... they have opened one other satellite office outside Edinburgh and that is in China (a research office in Shanghai).

Maybe I ought to have simply said, ... they have only opened one other research office outside Edinburgh in the last 110 years and that is in Shanghai.

You are correct, they do have a European presence that is incorporated in Ireland (May 2018) but I think that is for marketing their funds in Europe.

Right, I'm off for my Delaware Lawyer training
I hope we both end up being right on the merits of the new fund - which is more important.

midgesgalore

[Dod101]

You are correct of course in that BG only opened their Shanghai office last year. I should have checked first instead of relying on my memory. Someone did tell me though that they had recruited a dealer as well but I do not know if that is correct or not.

Dod

[Dod101]

So far so good. The tender offer resulted in the buying back of 26.38% of the shares at a discount to NAV of 1%. Since then (1 October) the Trust has sold about 20% of these shares back into the market at a premium. Good business! As Mark Knopfler said some years back, that's the way to do it.

Instead of being at a habitual discount the trust is now at a premium of about 5.8%. It will be interesting to see if this is just a honeymoon or whether BG will make it work. I bought some with the proceeds of the sale of Temple Bar.

Dod