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Investment firms JPMorgan Elect PLC and JPMorgan Global Growth & Income PLC on Thursday said they have signed a head of terms for a proposed merger.
The enlarged company will have net assets worth over £1.7 billion based on October 25 valuations, the companies said.
JPMorgan Global Income, or JGGI, is an FTSE 250-listed investment fund managed by JPMorgan Asset Management which invests in a high-conviction portfolio of 50 to 90 global stocks.
JPMorgan Elect, or JPE, offers investors the chance to switch between Managed Growth, Managed Income and Managed Cash on certain quarterly conversion dates, which could mean they avoid incurring liability to UK capital gains tax.
The merger, if approved by the respective shareholders at each firm, would be effected by a scheme of reconstruction. This would entail the voluntary liquidation of JPE, with its assets and transferred to JGGI, and the issue of shares in JGGI to JPE shareholders.
The firms maintain the merger has a "strong rationale", with benefits such as increased scale, lower management fees, lower ongoing charges, diversified shareholders, strong investment performance and attractive dividends.
In addition, it noted that JPMorgan - the manager of both companies - has offered to make a contribution to the costs of the proposed merger.
JGGI recently combined with former London listing Scottish Investment Trust in September. At June 30, it reported a net asset value per share of 403.10 pence.
"Building on the success of the company's combination with the Scottish Investment Trust PLC in August of this year, these proposals will add further scale and cost synergies that will allow both groups of shareholders to benefit from the greater scale of the trust. The company will continue to benefit from the strength and depth of the JPMorgan management team and an investment strategy and process that has delivered strong results for shareholders," said JGGI Chair Tristan Hillgarth.
At February 28, JPE reported a net asset value per Growth, Income and Cash shares was 975.5 pence, 96.4p and 103.5p respectively.
JPE shares were higher in London on Thursday morning with Managed Income shares up 1.5% to 91.58p, Growth shares up 0.4% to 923.20p, and Managed Cash up 2.0% to 104.00p. JGGI shares were up 0.7% at 429.00p.
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