The £806 million investment trust, which invests in undervalued investment companies around the world, will shortly change its name to AVI Global Trust with a new share price ticker of AGT.
The more conventional tag links the listed fund – which this year celebrates its 130th birthday – to its fund manager Asset Value Investors (AVI) and is in line with the £96 million AVI Japan Opportunity Trust (AJOT) launched last October.
Rival global trust F&C encountered some investor criticism last year when it dropped the historic Foreign & Colonial name while marking its 150th anniversary.
British Empire’s chair, Susan Noble (pictured), sought to defuse any antagonism by stating the move was in response to feedback from shareholders and potential investors.
Lengthy consideration had been made to a number of alternatives, she explained.
‘Over its long history, the company's name has made reference to the scope of its investment mandate, having launched in July 1889 as the Transvaal Mortgage, Loan & Finance Company Limited, and being renamed on three occasions since then as your company has evolved,' she said.
‘Over the past 30 years, the company has developed a global reach and the new name, we believe, will more accurately reflect where we invest and how the assets are managed.'
Slowdown mars first half
The news came as the company, managed by AVI chief executive Joe Bauernfreund, reported a difficult first half as world stock markets recoiled and then started to recover from fears of a global slowdown exacerbated by the US-China trade dispute.
The total return on net assets, including a 2p interim dividend, fell 3% in the six months to 31 March, with shareholder returns down 3.5%. This underperformed its benchmark, the MSCI All Country World ex-US index, which slipped 2.1%.
The best performing holdings in the 43-strong portfolio included Cosan (CZZ.N), a New York-listed holding company with big gas and infrastructure assets in Brazil; Swire Pacific (HKG:0019), the Hong Kong conglomerate and owner of the Cathay Pacific airline; and Pershing Square Holdings (PSH), the London-listed investment company that invests in the hedge fund of US investor activist Bill Ackman. Pershing Square, British Empire’s largest single investment at 9.4% of assets, has rebounded after a long period of poor performance with its shares up 34% this year.
However, these winners were offset by falls in Riverstone Energy (RSE), the oil and gas private equity investor hurt by this year’s fall in the oil price; the sell-off in Japan that hurt its basket of around 20 ‘special situation’ stocks accounting for 13% of assets; and a 12% slide in the shares of Wendel (MF:EPA), a 315-year-old French holding company with interests spanning chemicals, packaging, telecom infrastructure and security services.
Bauernfreund (pictured) commented: ‘Your company's portfolio is invested in listed equities around the world that tend to own high-quality assets. While the companies we invest in are not necessarily well known, the underlying businesses in which they invest will often be familiar, high-quality names.’
Last month the company took out a 4 billion yen (£27.7 million) credit facility with Scotiabank. It is using the money to repay its £15 million 81/8% debenture – or secured loan – four years early which, including a penalty, will cost £19.9 million. Although this will knock 0.8p or 0.1% off net asset value it is considered worthwhile as it will cut annual finance costs from 4.3% to 2.9%.
Bauernfreund has invested the remainder in Japan, where AVI is targeting smaller companies sitting on cash piles which are under growing pressure to return the money to shareholders. The manager said a trip to Japan in February had strengthened his conviction in the strategy which underpins the new AVI Japan Opportunity trust.
Beats ‘flexible’ trusts
British Empire shares have delivered a 60.9% total return to shareholders over five years. This is half the average of trusts in the Association of Investment Companies’ Global sector and is well below sector leaders such as Lindsell Train (LTI) and Scottish Mortgage (SMT).
However, it has done better than other broadly comparable trusts in the AIC Flexible sector that also invest in funds, such as Capital Gearing (CGT), Seneca Global Income & Growth (SIGT) and Henderson Alternative Strategies (HAST).
At 734p, up 7p or 1% to 734p, the shares trade at a discount of around 9% below NAV, according to Morningstar.