Contents

1. Overview for the week
2. Frostrow Retail investor events
3. Investment Themes
4. Sector data for the week

1. Overview for the week

Defence and bonds were in the news this week, and, let’s be honest, you can’t get away from tariffs. US tariffs on steel and aluminium imports increased to 50% (except the UK) and also saw Jamie Dimon, boss of JPMorgan say, “You are going to see a crack in the bond market…we will be fine.” I think he means, we’ll be fine as long as you don’t invest in long term government bonds, but he didn’t specifically say that. Something to think about for many and perhaps especially those investing in Lifestyle Funds and classic 60/40 equity / bond funds. It seems to me that the equity market (the only real asset that can hedge against the ravages of inflation, assuming the ONS get the data correct) is getting used to this kind of rhetoric and newsflow and is gently shrugging it off with a rise of 1.4% in the S&P 500 Index and 0.7% in the FTSE 100 Index, even with a high profile spat to dampen the mood a little.

Keir Starmer has put the UK on a war footing publishing a ‘root and branch’ defence review. The review endorses a change in the way that Britain should conduct any future warfare. Conflicts will need to be fought “through dynamic networks of crewed, uncrewed, and autonomous assets and data flows,” it argues, rather than simply concerning itself with number of troops. (And we saw how effective Ukraine were this week with £billions of equipment just taken out for only a modest expenditure). The OECD suggested UK growth will slow from 1.4% to 1.3% in 2025 and from 1.2% to 1% in 2026 due to tariffs and higher debt costs. To be fair, almost all countries have seen a downgrade from the OECD, with the US, Mexico and Canada likely to be worst affected. The Bank of England Governor also commented that interest rate cuts from here are uncertain due to tariffs also. On top of this, Deutsche Bank have also estimated at least £10bn of tax rises in the Autumn budget will be required due to the higher debt costs and defence spending required to go as high as 3% or even 3.5% of GDP in the coming years.

We note the growing number of investment trusts that are demonstrating a link between the defence sector and their particular investment opportunity (ie Seraphim Space and Sirius Real Estate this week). The LSE could do with a little defence also given the news on Wise this week, deciding to transfer its primary listing to the US (albeit maintaining a secondary listing in the UK) in order to get access to more liquidity including index inclusion. The shares were up quite significantly accordingly no doubt which will only encourage others. In the investment trust sector generally it was more of the same – a continuation of M&A activity, discount control and debt reduction was seen - albeit with this activity leading to discount contraction of 50bps from circa 14.5% to 14%. The contraction may have also been driven by Saba Capital hitting the newswires suggesting that they are “ready to buy billions more of UK investment trusts” and he is “open to taking stakes in trusts that hold illiquid assets.”

A couple of Frostrow investment trust clients had newsflow this week. Custodian Property Income REIT (CREI LN) acquired a £22.1m family property company via an all-share transaction this week. The team at Custodian say that "In addition to enhancing earnings per share and decreasing net gearing, the Transaction provides us with a portfolio that is both a strong fit with our income-focused strategy and highly complementary to our existing property portfolio, augmenting our regional, industrial bias and adding further diversification by tenant." House broker Deutsche Numis state: “With a market cap of £366m, CREI is already the largest diversified UK commercial property investment trust, and we expect that this transaction will improve its profile and secondary market liquidity further.”

The Biotech Growth Trust put out full year results in the week after a tough year in performance terms. There is a continuation vote coming there with commentary that "The Board firmly believes that it is in the best long-term interests of shareholders to vote in favour of the continuation of the Company, despite its recent underperformance. While acknowledging the challenges faced by the Company, we remain confident in the underlying fundamentals and long-term prospects of the sector in which we invest. Recent market conditions have been particularly challenging, but there are clear indications of recovery and growth potential that we are well-positioned to capture. As the Company's performance has been particularly volatile in the last year, should shareholders vote in favour of the Company's continuation in July, the Board will propose a one-off, interim continuation vote at the AGM in 2028, two years before the next regular vote is scheduled. This additional vote will provide an earlier opportunity for shareholders to reassess the Company's progress and determine whether the Portfolio Manager's investment strategy – based on the anticipated recovery in the biotech sector – is delivering the expected results."

2. Frostrow Events

Augmentum Fintech (AUGM LN, Financials & Financial Innovation, £167.3m mkt capn, 39.1% discount to NAV):  The latest Frostrow webinar from our London seminar in May 2025 is available to see on You Tube here.

https://www.youtube.com/watch?v=HsulTfN_o1A

Aurora UK Alpha (ARR LN, UK All Companies, £293.3m mkt capn, 10.1% discount to NAV): 

Kartik Kumar gives his updated thoughts at the time of our London investor seminar in May 2025 here:

https://www.youtube.com/watch?v=ZZGGM5Aw5sw

And via UK Investor Magazine also (May 2025):

Aurora UK Alpha Investment Presentation May 2025 - UK Investor Magazine

Biotech Growth Trust (BIOG LN, Biotechnology & Healthcare, £195.1m mkt cap, 9.4% discount to NAV): the latest webinar took place at 3pm UK on Tuesday 25 February 2025. You can hear the recording on the following link:

https://www.youtube.com/watch?v=wxOUIC0oT5s

Geoff Hsu gives further thoughts at the time of the Frostrow London investor event here:

https://www.youtube.com/watch?v=VjloEBj9O1I

CC Japan Income & Growth Trust (CCJI LN, Japan, £254.0m mkt capn, 8.9% discount to NAV): The last webinar was recorded on 22 January 2025 and is available on the following link: 

https://www.youtube.com/watch?v=MmbViKRnsdA

In addition, we highlight the most up-to-date thoughts from management at the time of our London investor seminar in May 2025 here:

https://www.youtube.com/watch?v=VcVErs9OUN8

To sign up to view the next CCJI webinar via Frostrow and Investor Meet Company, please click the link (2pm, 17 June 2025):

https://www.investormeetcompany.com/cc-japan-income-growth-trust-plc/register-investor

CQS Natural Resources Growth & Income (CYN LN, Commodities & Natural Resources, £131.5m mkt capn, 8.5% discount to NAV):  Please see the link to the last webinar on 4 November 2024: 

https://www.youtube.com/watch?v=dhSC3wNKLxM

The managers are presenting via Investor Meet Company at 11am on 10 June 2025, so please join via this link:

https://www.investormeetcompany.com/meetings/investor-presentation-865

Custodian Property Income REIT (CREI LN, Property UK Commercial, £384.9m mkt capn, 15.2% discount to NAV): The last webinar was recorded in January 2025 and is available on the following link: 

https://www.youtube.com/watch?v=Qd1-ciXoC2o

The manager also gives his most updated thoughts at the time of the Frostrow London investor event in May 2025 here: 

https://www.youtube.com/watch?v=XOQA7R2yBKk

Ecofin Global Utilities (EGL LN, Infrastructure Securities, £221.3m mkt capn, 9.3% discount to NAV) : Jean-Hugues de laMaze, lead manager of the Trust presented at a webinar with Frostrow on Wednesday 23 April 2025. The link to the recording is available on the link below:

https://www.youtube.com/watch?v=lVkYbR67ecE

Finsbury Growth & Income Trust (FGT LN, UK Equity Income, £1,314.1m mkt capn, 7.7% discount to NAV): Nick Train’s AGM presentation (January 2025) was recorded and is available to view on the Frostrow You Tube page. Click the link here to see it, it is worth a view:

https://www.youtube.com/watch?v=yE9HV__Iwlc

We also highlight our most recent recording of Nick’s presentation following our London investor event:

https://www.youtube.com/watch?v=HeiFCPd5zS8

MIGO Opportunities Trust (MIGO LN, Flexible Investment, £65.4m mkt capn, 6.8% discount to NAV): Following on from the HY results release, Nick Greenwood and Charlotte Cuthbertson presented on a webinar at 11am on 24 January 2025. This one stop shop is a great way to play the discounts on offer generally in the listed fund sector. The recording can be accessed on Frostrow’s You Tube page here:

https://www.youtube.com/watch?v=XuSoFuNKSXk

Mobius Investment Trust (MMIT LN, Global Emerging Markets, £148.9m mkt capn, 7.8% discount to NAV): Carlos Hardenberg, lead manager, presented at a webinar from his trip to Taiwan in April 2025. Please see below the link to the recording:

https://www.youtube.com/watch?v=sMBNxj6ZD-o

In addition, Carlos gives his thoughts at the time of the Frostrow London investor event in May 2025 here:

https://www.youtube.com/watch?v=E4GIjtAelhc

Carlos is also presenting via Investor Meet Company at 11am on 24 June 2025. Please use this link to sign up:

https://www.investormeetcompany.com/meetings/investor-presentation-845

Temple Bar Investment Trust (TMPL LN, UK Equity Income, £885.1m mkt capn, 2.5% discount to NAV): Ian Lance and Nick Purves presented on the trust at a webinar on 18 March 2025. Please do click on the link below to see the recording as well as the link to ‘reflections on current market volatility’ or to hear the Chairman, Richard Wyatt, or to see the recent AGM update

https://www.youtube.com/watch?v=wkaifQndXaQ

https://www.templebarinvestments.co.uk/media/insights/reflections-current-market-volatility/

https://www.investormeetcompany.com/updates/an-update-from-the-chairman/show

https://www.youtube.com/watch?v=AcVspDPT3-c

To sign up to view the next TMPL webinar via Frostrow and Investor Meet Company, please click the link (11am, 12 June 2025):

https://www.investormeetcompany.com/temple-bar-investment-trust-plc/register-investor

Worldwide Healthcare Trust (WWH LN, Biotechnology & Healthcare, £1,472.4m mkt capn, 6.6% discount to NAV): Sven Borho and Trevor Polischuk recently completed the latest webinar overview (November 2024). See the Frostrow You tube page for the recording. 

https://www.youtube.com/watch?v=tppMeH6W9Zo

Geoff Hsu gives updated thoughts at the time of the Frostrow London investor event in May 2025 here:

https://www.youtube.com/watch?v=VjloEBj9O1I

Frostrow Investor Relations team – Messrs Grant Challis, Neil Winward, Matt Burrows, Matt Norfolk-Clarke & Nicholas Todd 

Please contact us on ir@frostrow.com

Trump is doing his best to re-set the world trade order and in so doing will potentially re-set the investment landscape. Saba Capital have said they are “ready to buy billions more UK investment trusts [and they are] open to taking stakes in trusts that hold illiquid assets [now also]”. What has worked for the last few years (ie US Equity trackers, passive investments and short dated bonds) will not necessarily be the best idea in the coming periods. Whether there is a “crack” in the bond market or not, the investment trust sector is here offering best in class active management from the world’s top fund managers in a variety of liquid and less liquid asset classes. It continues to represent one third of the FTSE 250 Index and half of the FTSE Small Cap Index. There are highly valuable listed fund vehicles using the structure appropriately available to use for savings and investment today, as there have been for the last 150 + years. For DB and DC pension schemes, it may be an idea to look at these before some form of mandation comes in (if that is a word). Do not be short of investment trusts – they represent the greatest financial secret on these fine shores.

Find us on the web:  https://www.frostrow.com/

Find us on You Tube:  https://www.youtube.com/channel/UCAptpfmx0HITqvlI68psd7Q

Check out our April 2025 summary podcast also: FROSTROW CAPITAL - Frostrow Talks Trusts - AI Podcast - InvestorMeetCompany

Frostrow Capital, bringing you high quality, differentiated product in a UK listed closed-ended form

3. Further investment themes evident in the investment trust sector this week include:

Discount Control

Barings Emerging EMEA Opportunities Trust HY results to 31 March 2025 (BEMO LN, Global Emerging Markets, £76.7m mkt capn, 15.7% discount to NAV): NAV TR +10.0% vs MSCI Emerging Market EMEA +7.8%; share price TR +20.0%; "Saudi Arabia, our portfolio’s largest market, underperformed the EMEA region (while still outperforming both developed and emerging market indices in £ terms). Broadly, Middle Eastern economies have greater sensitivity to lower growth expectations and a weaker US Dollar – both effects of increasing trade uncertainty." "The Company has now entered the last year before the discount and performance targets set in October 2020, in conjunction with the broadening of the investment mandate, will be tested. While the portfolio’s outperformance since 2022 puts the performance target within realistic reach, the Board foresees the discount management target being missed. If the September 2025 targets are not met, the Board will consider the case for a tender offer alongside other strategic options, taking account of the Company’s remaining Russian assets." No gearing.

JPMorgan Indian IT (JII LN, India, £707.1m mkt capn, 6.8% discount to NAV): published a circular in connection with a tender offer to shareholders for up to 30 per cent. of the Company's issued share capital (removing the performance related tender), introducing a commitment to target a single digit discount through active market buybacks and the introduction of a triennial tender offer for 100% of the Company's outstanding share capital at a 3% discount to the prevailing NAV. The Board anticipates the first of the Triennial Tender Offers to be launched in Q2 2028. "The Board believes that the package of discount control mechanisms with the Tender Offer, paired with ongoing market buybacks and sight of a future liquidity event in the form of the Triennial Tender Offers will help to significantly reduce the discount."

Henderson Smaller Companies (HSL LN, UK Smaller Companies, £578.1m mkt capn, 9.1% discount to NAV): share buyback authority is substantially utilised and as such the Company has published a circular setting out further details of the proposal to renew the share buyback authority.

Baillie Gifford UK Growth (BGUK LN, UK All Companies, £250.9m mkt capn, 9.9% discount to NAV): published a circular seeking shareholder authority for proposals to renew the Company's share buyback authority. The Company has a stated policy of maintaining a single digit discount in normal market conditions

M&A news

Bloomberg and others reported that NextEnergy Solar Fund (NESF LN, Renewable Energy Infrastructure, £397.5m mkt capn, 26.8% discount to NAV) rebuffed an approach from Foresight Solar Fund (FSFL LN, Renewable Energy Infrastructure, £438.0m mkt capn, 28.7% discount to NAV) in recent weeks, with NESF ending the talks in May.

BBGI Global Infrastructure (BBGI LN, Infrastructure, £1,023.7m mkt capn, 0.7% premium to NAV) acquirer British Columbia announced the offer will close for acceptance at 1300 on 17 June 2025, having been declared unconditional on 20 May 2025. The shares will be delisted with effect from COB on 17 June 2025 and “shareholders who have not yet accepted the offer are therefore urged to do so as soon as possible… so that completed and valid acceptances are received by MUFG no later than1300 on 17 June 2025.”

Warehouse REIT (WHR LN, Property – UK Logistics, £453.7m mkt capn, 16.8% discount to NAV): the Board and Blackstone "have agreed the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Warehouse by Bidco." Total consideration of 110.6pps. "As at 31 March 2025, Warehouse had unaudited net tangible assets of £544 million and an unaudited net tangible assets value per Warehouse Share of 128.0 pence". " the Warehouse Independent Directors confirm they intend to recommend unanimously that Warehouse Shareholders vote in favour of the Scheme at the Court Meeting and the Resolution to be proposed at the General Meeting. "... the Warehouse Independent Directors confirm they intend to recommend unanimously that Warehouse Shareholders vote in favour of the Scheme at the Court Meeting and the Resolution to be proposed at the General Meeting." "...the Scheme must be passed by Warehouse Shareholders representing at least 75 per cent. of votes cast at the General Meeting."

Empiric Student Property (ESP LN, £685.4m mkt capn): notes the recent press speculation and confirms that, on 7 May 2025, it received a non-binding proposal from The Unite Group PLC to acquire the entire issued and to be issued share capital of Empiric. Following a period of engagement, the Board received a revised proposal from Unite on 29 May 2025 comprising 30p in cash and 0.09 new Unite shares per Empiric share. On the basis of the Proposal, the Board has agreed with Unite to enter an initial period of due diligence. A further announcement will be made as appropriate.

Assura (AGR LN, £1,580m mkt capn): confirms that this reciprocal due diligence in relation to PHP remains ongoing. The provision of due diligence materials continues and Assura is working closely with PHP to ensure that the process moves forward in a timely manner.

Saba Capital

https://www.bloomberg.com/news/articles/2025-06-06/boaz-weinstein-ready-to-plow-billions-more-into-uk-trust-fight?srnd=homepage-uk

Continuation vote

Downing Renewables & Infrastructure Trust (DORE LN, Renewable Energy Infrastructure, £142.9m mkt capn, 27.8% discount to NAV): shareholders voted through the Company's continuation albeit 11.15% of shareholders voted against

Gearing news

NewRiver REIT (NRR LN, £373.6m mkt capn) has sold Abbey Centre, Newtonabbey in Northern Ireland for £58.8m, in-line with the March 2025 book value, reflecting a 9% NIY. The sale price is in line with both the March 2025 and March 2024 book values. The “sales proceeds will be used to reduce NewRiver's LTV as at 31 March 2025 by 4% bringing it well within LTV guidance of ‹40%.” Separately, NRR has published FY results to 31 March 2025: EPRA NTA 102pps; UFFO per share 8.1p vs DPS 6.5p; LTV 42.3% (reduced since though, see above); occupancy 96.1%. CEO: “It has been a successful and transformative year for NewRiver, the highlight of which was the highly earnings accretive acquisition of Capital & Regional. Whilst M&A activity was our primary focus in the year, this did not detract from our operational performance, and we have delivered another year of excellent leasing both in terms of pricing and volume.”

Abrdn Asia Focus (AAS LN, Asia Pacific Smaller Companies, £429.2m mkt capn, 12.1% discount to NAV): the result of the conversion of Convertible Unsecured Loan Stock 2025 to Ordinary shares announced, with a total of 10,562,933 Ordinary shares to be admitted to the LSE on 6 June. AAS has also entered into a new, secured, two-year multi-currency revolving credit facility of £35m with The Bank of Nova Scotia which will expire on 28 May 2027. £35m has been drawn down under this facility and been used to finance the part redemption of CULS with the balance available for investment, leading to a slight reduction in current gearing levels

Strategy update

Foresight Environmental Infrastructure Limited (FGEN LN, Renewable Energy Infrastructure, £483.6m mkt capn, 27.8% discount to NAV): provided an update on strategy and performance. The Board looked at a full range of strategic options and concluded that the long term prospects of the Company and shareholder interests are best served through proactive management of the existing portfolio and a refocused investment strategy that reflects the structural changes in macro-economic conditions since 2022(ie higher return expectations in an elevated rate environment). FGEN will focus on renewable energy generation and "will not target further material disposals of its well-established assets in the near term." From 1 October 2025, management fees will be calculated 50% based on NAV and 50% on market capitalisation (capped at NAV), which will likely save over £800k pa (c13% reduction). YE dividend target for year to 31 March 2026 announced at 7.96pps (+2% 2025)

Results / updates

JPMorgan China Growth & Income HY results to 31 March 2025 (JCGI LN, China / Greater China, £194.1m mkt capn, 10.3% discount to NAV): NAV TR 4.2% vs MSCI China Index +10.4%; share price TR +9.4%; "...much of the rise of the MSCI China Index during the period was again driven by value stocks…" "the Company's gearing ranged from 2.4% to 11.7%, reflecting the Portfolio Managers' increased confidence in the Chinese markets, ending the half year at 10.7%."

Empiric Student Property (ESP LN, £685.4m mkt capn) trading update as at 4 June 2025: “Pace of reservations for academic year 2025/26 remains comfortably ahead of the wider market providing encouragement that our portfolio will again be effectively full." " [we] continue to anticipate achieving an occupancy rate of 97 per cent or better with the delivery of like for like rental growth comfortably in excess of inflation at between four and five per cent.” 0.925pps quarterly dividend declared, in-line with minimum FY dividend target of 3.7pps. EPRA LTV 27.7% and weighted average cost of debt of 4.5%

Templeton Emerging Markets IT FY results to 31 March 2025 (TEM LN, Global Emerging Markets, £1,804.1m mkt capn, 12.1% discount to NAV): NAV TR +8.8% vs MSCI EM Index +5.8%; share price TR +13.3%; OCR 0.95% (0.97% 2024). The Board have consulted with over half of all shareholders. They are "broadly supportive" albeit "some shareholders expressed a preference for higher - but still moderate - levels of gearing." Bought back 8.1% of issued share capital giving a 1.16% NAV uplift for those remaining invested.

Wind up news

Abrdn Diversified Income & Growth HY results to 31 March 2025 (ADIG LN, Flexible Investment, £136.2m mkt capn, 32.6% discount to NAV): NAV TR +4.4%; "It is important for shareholders to note that the Company's capacity for revenue generation substantially decreased following the sale of the public markets assets and will reduce further as the private markets' assets are realised and capital is returned to shareholders. It is expected that, as a minimum, the Company will declare a dividend each September, normally payable in October, to maintain investment trust status. The Board and its advisers will continue to explore options for returning cash to shareholders in a timely and tax-efficient manner, in line with the Managed Wind-Down strategy approved by shareholders in February 2024, as investments are realised and the value of the Company's undrawn commitments to existing investments reduces."

Defence

Sirius Real Estate FY results to 31 March 2025 (SRE LN, £1,460m mkt capn): EPRA NTA +7.1% to €1.1761; EPRA EPS -4.7% to €0.0782; LFL rent roll growth of +6.3%; 6.15cps dividend (2024: 6.05cps); “€270.0m of acquisitions and €46.3m of disposals, at a premium to book value” during the period. “€571.3m cash position at 31 March 2025 provides capacity for acquisitions, investment and refinancing of the €400m bond due in June 2026” with LTV at 31.4% (2024: 33.9%); SRE is "trading in line with management expectations in the new financial year" and "continues to target further growth options in both Germany and the UK on an opportunistic basis, including recycling of mature assets and reinvesting in value-add opportunities". In addition, SRE “has appointed Major General (Retd) Angus Fay C.B. as Strategic Adviser, with defence related demand for real estate set to rise….SRE estimates that up to 20% of its portfolio is suitable for defence-related purposes, with much of its estate having been in military use in the past, whether as factories or transport hubs for military logistics”

Seraphim Space IT Q3 results to 31 March 2025 (SSIT LN, Growth Capital, £172.2m mkt capn, 28.0% discount to NAV): NAV TR -0.3%; £16.5m cash reserves; "ICEYE (25.5% of NAV) signed a memorandum of understanding during the quarter with the Swedish aerospace and defence company Saab AB, alongside a corporation agreement with NATO to provide synthetic aperture radar ('SAR') data to its Situation Centre in Brussels." "The strategic importance of space has never been clearer. As geopolitical tensions rise and defence priorities shift, governments are turning to space-based technologies to secure their borders, enhance intelligence capabilities and ensure technological sovereignty. This is driving a new wave of procurement in the space sector."

Acquisition

Custodian Property Income REIT (CREI LN, Property – UK Commercial, £384.9m mkt capn, 15.2% discount to NAV) has acquired a £22.1m family property company via an all-share transaction. The transaction provides CREI “with a £19.4m portfolio of 28 smaller lot-size regional UK investment properties (the “Investment Portfolio”) which are highly complementary to the Company’s existing assets, as well as c. £2.7m of newly built housing stock, the ongoing sale of which is expected to conclude in the next few months, generating additional cash for the Company." Managing Director at Custodian Capital Limited says "In addition to enhancing earnings per share and decreasing net gearing, the Transaction provides us with a portfolio that is both a strong fit with our income-focused strategy and highly complementary to our existing property portfolio, augmenting our regional, industrial bias and adding further diversification by tenant."

Oakley Capital Investments (OCI LN, Private Equity, £847.0m mkt capn, 30.3% discount to NAV) is investing £5m via Origin II in Infravadis, “a tech-enabled platform focused on the >€25bn European Underground Infrastructure Maintenance market.”

APAX Global Alpha (APAX LN, Private Equity, £549.7m mkt capn, 42.2% discount to NAV): "expects to invest an additional c.€3m indirectly in WGSN following WGSN's acquisition of IWSR...Including this acquisition, AGA has invested a total of approximately €24.7m in WGSN on a look-through basis."

4. Sector data this week (AIC data, as at Thursday's close)



Equity Capital Markets

n/a

Ex Dividend

AGR 0.84p, BRAI 3.03p, BRFI $0.0365, CGT 102p, EDIN 7.50p, ENRG 1.45p, FGEN 1.95p, LWDB 8.375p, MRC 1.55p, RCOI $0.0008, SHED 4.35p, STS 3.61p, UEM 2.325p

On Wednesday we have the UK Spending Review to look forward to and we will see how whether Trump and Elon kiss and make up.