Honeycomb Investment Trust is discussing a possible merger with Pollen Street Secured Lending (PSSL), to create the largest listed investment trust dedicated to the specialty finance market.
Honeycomb has already won the support of its largest shareholders – Quilter Investors, Standard Life Aberdeen, Thesis Asset Management and AXA Investment Managers – who agreed that a merger “would be in the best long-term interests of both companies and their respective shareholders.”
The merged company would have combined investment assets of approximately £1.5bn, “enabling it to continue to capitalise on attractive investment opportunities, while ensuring a stable NAV return to shareholders,” according to Honeycomb’s analysis. It would also reduce operating and management costs, and create a more diversified portfolio, “better positioning it for changing economic cycles”.
It is hoped that the new company would qualify for inclusion on the FTSE 250, which would improve its liquidity.
Under the terms of the proposed merger, PSSL’s shareholders would be entitled to 0.9335 of Honeycomb shares in exchange for each PSSL ordinary share.
PSSL shareholders would also be entitled to receive any dividends up to the value of 12p per share for the three-month period to 30 June 2020 and the three-month period to 30 September 2020.
After the proposed merger, PSSL shareholders would own almost two thirds (65.3 per cent) pf the new company.
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“The board of [Honeycomb] believes that there is an opportunity for shareholder value creation from the combination of [Honeycomb] and PSSL to create the leading listed investment trust dedicated to providing finance to the specialty finance market,” said a Honeycomb spokesperson in a stock market update.
“The [Honeycomb] board considers that the combination of PSSL and [Honeycomb] would be in the best long-term interests of both companies and their respective shareholders.”
Both Honeycomb and PSSL specialise in alternative finance investments, and both are managed by entities affiliated with the alternative asset manager Pollen Street Capital.
If the two companies agree to proceed with the merger, Honeycomb will make an announcement by no later than 5pm on 3 September 2020, in accordance with market rules.