Tender Offer

RNS Number : 3113C

Qatar Investment Fund PLC

15 October 2015

 

15 October 2015

Qatar Investment Fund PLC 

("QIF" or the "Company")

Tender Offer to purchase up to 14.0 per cent. of the Company's issued share capital

A circular explaining the terms of a Tender Offer for up to 14.0 per cent. of the issued Share Capital of the Company and a notice of an Extraordinary General Meeting to be held on 12 November 2015 has today been posted to Shareholders (the "Circular").

1.    Introduction

The Company's Annual General Meeting has been convened for 12 November 2015. The Company's Articles of Association require the Board to put to Shareholders a resolution at the Annual General Meeting that the Company cease to continue in existence (the "Discontinuation Resolution"). Shareholders holding at least fifty-one per cent. of the Shares must vote in favour of the Discontinuation Resolution for it to be passed. The Company's first discontinuation resolution was proposed at the annual general meeting of the Company in 2012 and was not passed. Pursuant to the Articles, if the Discontinuation Resolution is not passed at the Annual General Meeting to be held on 12 November 2015, the Board is obliged to propose the same resolution at every third annual general meeting thereafter.

The Board is unanimously recommending that Shareholders vote against the Discontinuation Resolution at the Annual General Meeting and the Directors intend to vote their Shares accordingly. Shareholders are referred to the report of the Directors in the annual report and accounts for the year ended 30 June 2015 (incorporating the notice of Annual General Meeting) for a full explanation of the reasons why the Board is unanimously recommending that Shareholders vote against the Discontinuation Resolution at the Annual General Meeting.

As announced by the Company on 13 April 2015, the Directors resolved to put forward a proposal to implement a tender offer in the fourth quarter of 2015, being a graduated tender offer of up to 15 per cent. of the Company's issued Share Capital at the Record Date (excluding treasury shares). The final size of the Tender Offer is determined by the average discount to NAV per Share at which the Shares trade in the twelve month period from 9 October 2014 to 8 October 2015, assuming it is in excess of 10 per cent., and capped at 15 per cent. Further details about this graduated tender offer are set out in paragraph 3 of this announcement. 

2.    The Company's Performance and Prospects

The Company is a closed-ended investment company which was incorporated in the Isle of Man on 26 June 2007. The investment objective of the Company is to invest primarily in Qatari equities and in listed companies in other GCC countries. 

As at 14 October 2015, being the latest practicable date prior to the publication of this document, the unaudited Net Asset Value per Ordinary Share was US$1.4635 and the closing mid-market Share price was US$1.27.

The Company's NAV per Share has decreased from US$1.6571 at 9 October 2014 to US$1.4635 at 8 October 2015, which is equal to a decrease of 11.68 per cent. This compares to the 15.01 per cent. decrease in the QE Index over the same period.

During this period, Shareholders received a dividend of 3.5 cents per Share which was paid in March 2015 and the Directors have declared a dividend for the 2015 financial year of 4.0 cents per Share payable in 2016 after completion of the Tender Offer.

According to the Ministry of Development and Planning, Qatar's GDP increased 4.1 per cent. in Q1 2015 compared to Q1 2014 (using a new base year of 2013) driven by non-hydrocarbon growth. Compared to Q4 2014, GDP grew by 3.4 per cent.

During Q1 2015, the hydrocarbon sector contracted by 0.1 per cent. compared to Q1 2014, while the non-hydrocarbon sector increased by 8.9 per cent. as a result of a rise in construction, trading, hospitality and financial sector activity and an increase in Qatar's population in Q1 2015. Construction rose by 11.4 per cent. on a year-on-year basis, helped by major public investments. The financial sector (which includes finance, insurance, real estate and business services) rose by 9.8 per cent. while the trade, hotels and restaurants sectors (combined) grew by 9.3 per cent. in Q1 2015 when compared to Q1 2014.

The Investment Adviser believes that these factors should continue supporting non-hydrocarbon growth. Additional output from the Barzan Gas project should further help GDP growth.

Qatar's population increased by 4.9 per cent. from January to June 2015 to a total of 2.34 million. Population growth is expected to remain strong as infrastructure spending attracts expatriate workers. The Investment Adviser believes that the rise in population should drive consumption growth which will benefit local consumer companies.

The Investment Adviser believes Qatar's long term infrastructure spending will continue, driven by low gearing, accumulated budget surpluses and Qatar having one of the lowest break even oil prices for its oil production in the region. Notwithstanding investment related to the FIFA World Cup, the Investment Adviser believes that Qatar's GDP would continue to grow above 5 per cent. annually.

Looking ahead, the Investment Adviser believes that the Qatari market is expected to perform well over the long term as a result of strong fundamentals such as infrastructure spending, on-time projects completion, non-hydrocarbon economic growth and a rising population. The Qatari government is set to continue with its infrastructure spending programme irrespective of the FIFA World Cup as the majority of these projects were planned before the World Cup was awarded to Qatar in 2010. Infrastructure spend is expected to support economic growth of over 6 per cent. per annum until 2017.

3.    The Tender Offer

The Board is aware that the Shares are tightly held and that therefore liquidity in the Shares can, at times, be limited. This Tender Offer is designed to enable those Shareholders (other than Restricted Shareholders) who wish to realise a portion of their holding of Shares to have the opportunity to do so.

As announced by the Company on 13 April 2015, the Directors resolved to put forward a graduated tender offer for up to 15 per cent. of the Company's issued Share Capital at the Record Date (excluding treasury shares). The final size of the Tender Offer is determined by the average discount to NAV per Share at which the Shares trade in the twelve month period from 9 October 2014 to 8 October 2015, assuming it is in excess of 10 per cent. and capped at 15 per cent., as set out in the table below. 

12 month average discount	Tender offer size
Less than 10%	Nil
10.00% -10.99%	10.0%
11.00% -11.99%	11.0%
12.00% -12.99%	12.0%
13.00% - 13.99%	13.0%
14.00% - 14.99%	14.0%
15% or greater	15.0%

Notwithstanding the improvement in the NAV per Share performance of the Company during 2015, the average discount to NAV per Share at which the Shares have traded for the past 12 month period has been 14.7 per cent. (from 9 October 2014 to 8 October 2015), and has therefore exceeded 10 per cent.

Accordingly, the Directors have put forward to Shareholders a tender offer for up to 14.0 per cent. of the Company's issued Share Capital (excluding treasury shares). The total number of Shares to be purchased under the Tender Offer will not exceed 19,333,165 Shares, representing 14.0 per cent. of the Company's issued Share Capital (excluding treasury shares) as at 14 October 2015 (being the latest practicable date prior to the publication of this announcement).

The Tender Price will be an amount equal to a discount of one per cent. to Formula Asset Value as at the Calculation Date, calculated in accordance with paragraph 3 of Part III. The Record Date for the Tender Offer is 5.30 p.m. on 20 October 2015.

The Tender Offer will be conditional, inter alia, on the Discontinuation Resolution not being passed at the Annual General Meeting and the passing of the Resolution to be proposed at the Extraordinary General Meeting. The Tender Offer will also be conditional on the Company satisfying the distributable profits requirements under Isle of Man law at the time of the Tender Offer.

The Board has proposed the Resolution at the Extraordinary General Meeting which, if passed, will provide the Board with authority to repurchase Shares in order to implement the Tender Offer. All Shares tendered will be cancelled.

Key points of the Tender Offer

The key points of the proposed Tender Offer are as follows:

·     the Tender Offer is for up to 14.0 per cent. of the Company's issued Share Capital (excluding treasury shares) as at the Record Date;

·     Shareholders (other than Restricted Shareholders) on the Register on the Record Date will be able to tender a number of their Shares, up to the maximum of that Shareholder's Basic Entitlement;

·     Shareholders (other than Restricted Shareholders) on the Register on the Record Date will also be entitled to tender additional Shares in excess of their Basic Entitlement;

·     the Tender Price will be the price per Share which represents an amount equal to a discount of one per cent. to Formula Asset Value as at the Calculation Date;

·     continuing Shareholders should receive an uplift to their NAV per Share as the Tender Price is being calculated to a discount of one per cent. to Formula Asset Value (which includes the costs of the Tender Offer (including the costs of associated portfolio realisations));

·     the Tender Price will be paid to Shareholders in US Dollars and will be effected by the despatch of cheques drawn on an account of a branch of a United Kingdom clearing bank, or the crediting of CREST accounts as appropriate; and

·     any Shares tendered will be cancelled.

Conditions of the Tender Offer

The Tender Offer is conditional, inter alia, upon: (i) the Discontinuation Resolution not being passed at the Annual General Meeting; (ii) the Company obtaining the necessary Shareholders' authority to implement the Tender Offer at the Extraordinary General Meeting; (iii) the Company satisfying the distributable profits requirements under Isle of Man law at the time of the Tender Offer; and (iv) the Repurchase Agreement becoming unconditional in all respects (save in respect of any condition relating to the Tender Offer becoming unconditional).

Implementation of the Tender Offer will require approval by Shareholders at the Extraordinary General Meeting, which is to be held at 10.30 a.m. on 12 November 2015. The Tender Offer is also conditional upon Panmure Gordon being satisfied that the Company has sufficient funds available to meet its obligations under the Repurchase Agreement. In addition, the Tender Offer may be postponed or terminated in certain other circumstances as set out in paragraph 2 of Part III of the Circular.

The number of Shares to be acquired by Panmure Gordon under the Tender Offer will not in any event exceed 19,333,165 Shares, representing 14.0 per cent. of the Company's issued Share Capital (excluding any Shares held in treasury by the Company) as at 13 October 2015 (being the latest practicable date prior to the publication of this document).

The Company's authority to repurchase its own Shares, to be proposed at the Company's Annual General Meeting to be held on 12 November 2015 in respect of up to 14.99 per cent. of the Company's issued Share Capital (excluding treasury shares) as at 29 September 2015 (being 20,720,084 Shares) will, if approved by Shareholders at the Annual General Meeting, remain in force and will be unaffected by the Tender Offer.

Options for Shareholders

Shareholders on the Register on the Record Date only can choose:

·     to continue their full investment in the Company; or

·     save for Restricted Shareholders, to tender their Basic Entitlement, plus the option to tender additional Shares which may be purchased if other Shareholders tender less than their Basic Entitlement.

Shareholders (other than Restricted Shareholders) on the Register at the Record Date will be entitled to have up to 14.0 per cent. of their respective holdings purchased under the Tender Offer (and also the option to tender additional Shares which may be purchased if other Shareholders tender less than their Basic Entitlement).

Further details of the Tender Offer

Shareholders (other than Restricted Shareholders) on the Register on the Record Date are invited to tender for sale some of their Shares up to each Shareholder's Basic Entitlement to Panmure Gordon who, as principal, will purchase at the Tender Price the Shares validly tendered (subject to the overall limits of the Tender Offer) and, following the completion of all those purchases, sell the relevant Shares on to the Company at the Tender Price by way of an on-market transaction, in accordance with the terms of the Repurchase Agreement. All transactions will be carried out on the London Stock Exchange.

Shareholders will also have the option to tender additional Shares which may be purchased by Panmure Gordon to the extent that other Shareholders tender less than their Basic Entitlement. Any such excess tenders will be satisfied pro rata in proportion to the amount tendered in excess of the Basic Entitlement (rounded down to the nearest whole number of Shares) or otherwise at the discretion of Panmure Gordon, in consultation with the Board.

The Tender Offer is subject to certain conditions, and may be terminated in certain circumstances as set out in paragraph 2 of Part III of the Circular. Further details of the calculation of the Tender Price are set out in paragraph 3 of Part III of the Circular.

Shareholders' attention is drawn to the letter from Panmure Gordon set out in Part II of the Circular and to Part III of the Circular and, for Shareholders who hold their Shares in certificated form, to the Tender Form which together constitute the terms and conditions of the Tender Offer.

Details of how Shareholders will be able to tender Shares can be found in paragraph 4 of Part III of the Circular.

Shareholders should note that, once tendered, Shares may not be sold, transferred, charged or otherwise disposed of other than in accordance with the Tender Offer.

Shareholders are not obliged to tender any Shares and if they do not wish to participate in the Tender Offer Shareholders should not complete or return their Tender Form.

Shareholders who are in any doubt as to the contents of this document or as to the action to be taken should immediately consult their stockbroker, bank manager, solicitor, accountant or other independent professional adviser authorised under the Financial Services and Markets Act 2000 or from an appropriately qualified independent adviser.

4.    Restricted Shareholders and other Overseas Shareholders

The attention of Restricted Shareholders and Overseas Shareholders is drawn to paragraph 10 of Part III of the Circular. The Tender Offer is not being made to Shareholders who are resident in, or citizens of, Restricted Territories. Restricted Shareholders are being excluded from the Tender Offer to avoid infringing applicable local laws and regulations relating to the implementation of the Tender Offer. Accordingly, copies of this document, the Tender Form and any related documents are not being and must not be mailed or otherwise distributed in or into Restricted Territories.

It is the responsibility of all Overseas Shareholders to satisfy themselves as to the observance of any legal or regulatory requirements in their jurisdiction, including, without limitation, any relevant requirements in relation to the ability of such Overseas Shareholders to participate in the Tender Offer.

5.    General Meeting

The Proposal set out in this document is subject to Shareholder approval at the Extraordinary General Meeting that has been convened for 10.30 a.m. on 12 November 2015, to be held at the offices of Galileo Fund Services Limited, Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB. Notice of the Extraordinary General Meeting is set out at the end of the Circular. The Resolution to be proposed is to authorise the Company to make market purchases of its Shares pursuant to the Tender Offer on the terms set out in the Circular.

The Resolution will be proposed as an ordinary resolution which requires, on a show of hands, more than 50 per cent. of Shareholders voting to vote in favour to be passed or, on a poll, votes in favour to be cast by holders of more than 50 per cent. of the Shares which are voted on the Resolution. Under the Articles of Association, two Shareholders entitled to attend and vote on the business to be transacted, each being a Shareholder present in person or a proxy for a Shareholder or a duly authorised representative of a corporation which is a Shareholder, shall constitute a quorum. Every Shareholder present in person or (being a corporation) by representative or by proxy shall, on a show of hands, have one vote and, on a poll, shall have one vote for every Share held by him.

6.    Recommendation

The Board considers that the Proposal is in the best interests of Shareholders as a whole. Accordingly, the Board recommends that Shareholders vote in favour of the Resolution to be proposed at the Extraordinary General Meeting, as those Directors who hold beneficial interests in Shares intend to do in respect of their own beneficial holdings of Shares which, in aggregate, amount to 92,071 Shares representing approximately 0.07 per cent. of the issued Share Capital of the Company (excluding treasury shares) .

The Investment Adviser has indicated its intention to tender its Basic Entitlement of 3,559,968 Shares pursuant to the Tender Offer. Each of Nicholas Wilson and Leonard O'Brien, Directors of the Company, has indicated his intention to tender his Basic Entitlement of 7,000 Shares and 5,889 Shares, respectively, pursuant to the Tender Offer.

The Board makes no recommendation to Shareholders as to whether or not they should tender their Shares. Whether or not Shareholders decide to tender any of their Shares will depend, among other things, on their individual circumstances including their tax position and on their view of the Company's prospects. Shareholders in any doubt as to the action they should take should consult an appropriately qualified independent financial adviser, authorised under the Financial Services and Market Act 2000, without delay.

7.    Expected Timetable of Principal Events

The expected timetable for the Tender Offer is as follows:

Record Date for participation in the Tender Offer	5.30 p.m. on 20 October 2015
Latest time and date for receipt of Tender Forms or for settlement of TTE Instructions in respect of the Tender Offer	1.00 p.m. on 9 November 2015
Latest time and date for receipt of Forms of Proxy in respect of the Extraordinary General Meeting	10.30 a.m. on 10 November 2015
Extraordinary General Meeting	10.30 a.m. on 12 November 2015
Calculation Date	5.30 p.m. on 2 December 2015
Results of the Tender Offer and Tender Price announced	7 December 2015
Settlement date: cheques despatched and CREST accounts credited with proceeds in respect of successfully tendered Shares	14 December 2015
Balancing certificates despatched and CREST accounts credited in respect of unsold Shares	from 14 December 2015

Each of the times and dates in the expected timetable may be extended or brought forward without further notice. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service provider.

All references to times are to London times.

Capitalised terms and expressions shall have the same meanings as those attributed to them in the Circular.

A copy of the Circular will shortly be available for inspection on the National Storage Mechanism at www.hemscott.com/nsm.do and is available for download from the Company's website www.qatarinvestmentfund.com/publications.

For further information:

Qatar Investment Fund Plc [phone]

Nick Wilson

Panmure Gordon [phone]

Richard Gray / Andrew Potts / Atholl Tweedie

Maitland [phone]

William Clutterbuck / Robbie Hynes

Galileo Fund Services Limited [phone]

Ian Dungate

 

END

 

 

TENGGGQUUUPAGMC