Proposed Reconstruction and Rollover
Summary by AI BETAClose X
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.
This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction in which the same would be unlawful. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR. The person responsible for arranging for the release of this announcement on behalf of Aberdeen UK Smaller Companies Growth Trust plc is Aberdeen Corporate Secretary Limited as Company Secretary.
Aberdeen UK Smaller Companies Growth Trust plc
("AUSC" or the "Company")
Legal Entity Identifier (LEI): 213800UUKA68SHSJBE37
18 September 2026
Proposed reconstruction and rollover into JPMorgan UK Small Cap Growth & Income plc ("JUGI")
Introduction
The boards of AUSC and JUGI are pleased to announce that heads of terms have been agreed for a combination of AUSC and JUGI. The combination is the culmination of a competitive private review process undertaken by the AUSC board, which both boards believe offers the best outcome for AUSC's shareholders as well as delivering meaningful benefits for existing JUGI shareholders.
The board of AUSC regularly evaluates both the Company's performance and the attractiveness and appeal of the Company to investors.
The board is conscious that over the last five years the Company has bought back more than half of its issued share capital, which has been essential to limit the discount and discount volatility. Whilst this has been in the best interests of shareholders, it has significantly reduced liquidity in the Company's shares and the board is concerned about the impact that ongoing share buybacks are likely to continue to have on the size and scale of the Company, the liquidity in the Company's shares and the Company's ability to appeal to investors and grow over time. The board has negotiated the investment management fee down on two occasions in the past few years, resulting in a reduction in the ongoing charges ratio ("OCR"). However, as a result of the continuing buyback this improvement in the OCR will be difficult to sustain with the OCR expected to rise in the current financial year, further reducing the Company's attractiveness when compared to its peers.
Investment performance has also been challenging for a significant period during which time the board, working with its investment manager, has robustly assessed and challenged the Company's portfolio managers and their investment process which has resulted in some changes in approach. Despite this, recent performance remains below both the benchmark and a number of similar peers limiting the appeal of the Company to potential investors.
Accordingly, the board decided to undertake a private review of the Company's management arrangements and invited proposals from a targeted selection of candidates, including its incumbent manager.
Following a detailed request-for-proposal ("RFP") process the board has agreed terms of a combination of AUSC and JUGI to be implemented through a proposed members' voluntary winding up of the Company by way of a scheme of reconstruction of AUSC under Section 110 of the Insolvency Act 1986 (the "Scheme"). Pursuant to the Scheme AUSC shareholders will be entitled to receive new shares in JUGI or to elect some or all of their shares for cash, subject to an aggregate limit of 35 per cent. of AUSC's share capital. The Scheme and the issue of New JUGI Shares are, together, the "Proposals".
Following implementation of the Proposals the enlarged JUGI ("enlarged JUGI") will continue to be managed by JPMorgan Funds Limited (which has delegated the management of the Company's portfolio to JPMorgan Asset Management (UK) Limited, together "JPMF") in accordance with its existing investment objective and policy. Conditional on the Proposals completing, JPMF has agreed to reduce the management fees it charges to the enlarged JUGI to 0.6 per cent. per annum on net assets up to and including £200 million and 0.55 per cent. per annum on net assets thereafter (currently 0.65 per cent. and 0.55 per cent. respectively). Further, JPMF has committed to make a financial contribution to the Proposals (as described in the section titled "JPMF cost contribution").
Liz Airey, Chairman of AUSC commented: "I am delighted that we can offer our shareholders the opportunity to rollover their holdings into an investment trust with exceptional long-term performance within the UK Smaller Companies sector. Those who elect to do this will also benefit from holding shares in a larger, and so more cost efficient, company which should offer better trading liquidity."
Katrina Hart, Chairman of JUGI commented: "We are delighted to announce a proposed combination with AUSC following a competitive process. This partnership will create an enlarged company that delivers meaningful benefits for both sets of shareholders, including improved market liquidity and a reduction in our ongoing costs ratio. JUGI makes good use of the investment trust structure through gearing and its enhanced dividend, while the long-term performance record of its experienced management team is compelling. This is JUGI's second consolidation in the last three years and the Board's ambition is that JUGI is recognised as the pre-eminent investment trust investing in UK smaller companies."
Background to JUGI
JUGI is one of the oldest UK Smaller Companies investment trusts, having launched in 1990. In recent years, JUGI has pursued a proactive growth strategy, focused on remaining attractive to a wide investor base, which included the merger with JUGI's sister trust, JPMorgan Mid Cap Investment Trust plc in 2024.
JUGI is managed by Georgina Brittain and Katen Patel, who have been managing the trust for 28 years and 12 years, respectively. JUGI's strategy, which focuses on Value, Quality and Momentum factors, aims for repeatable alpha generation across a variety of market conditions. It has delivered positive long-term NAV total return outperformance of +4.2 per cent. per annum above its composite benchmark1 over the last ten years. The portfolio managers are members of a dedicated UK Mid and Small Cap specialist investment team benefitting from the broader resources of JPMAM's International Equity Group, a 90+ team of investment professionals globally, with expertise in both quantitative and qualitative analysis.
Although JUGI emphasises total return rather than income growth, JUGI offers an attractive dividend policy, targeting a 4 per cent. annual yield based on prior year-end NAV, paid quarterly, drawing from both income and realised capital returns, thereby using a unique feature of the investment trust structure. This enhanced dividend policy represents a significant initial increase in dividend yield for AUSC shareholders without altering the focus on capital growth at a portfolio level.
Summary of the Proposals
Pursuant to the Scheme, eligible AUSC Shareholders will be entitled to receive, in respect of some or all of their AUSC shares:
a) new ordinary shares of 5 pence each in the capital of JUGI ("New JUGI Shares") (the "Rollover Option"); and/or
b) cash (the "Cash Option").
The number of New JUGI Shares to be issued to AUSC Shareholders under the Rollover Option will be calculated on a Formula Asset Value ("FAV")-to-FAV basis, based on each company's net asset value calculated in accordance with its normal accounting policies and adjusted to take account of: 1) any unaccrued costs and expenses directly attributable to the implementation of the Proposals and execution of the Scheme ("Proposal Costs"); 2) the Cash Option Discount (defined below); and 3) the Management Fee waiver as described in the section titled "JPMF cost contribution".
Entitlements under the Cash Option will be calculated on the basis of the "Cash FAV", which will be calculated as the Residual NAV multiplied by the percentage of AUSC shares that elect for the Cash Option, less a discount of 2 per cent. of such amount (the "Cash Option Discount"), where the "Residual NAV" is the NAV of AUSC (as determined in accordance with AUSC's normal accounting policies less any Proposal Costs not already accrued by AUSC) as at the Scheme calculation date (the "Calculation Date"), less the value of the cash, assets and undertakings appropriated to a liquidation pool, together with the proposed liquidator's retention.
AUSC Shareholders who are eligible to receive New JUGI Shares and who, in respect of all or part of their holding of AUSC shares, do not make a valid election for the Cash Option will be deemed to have elected for the Rollover Option in respect of such holding.
Benefits of the Proposals
The benefits of the Proposals are expected to include:
· Continued investment exposure to UK Smaller Companies through the investment trust structure: JUGI seeks to provide capital appreciation through investment in a diversified portfolio of UK listed smaller companies, emphasising capital growth, thus providing AUSC shareholders with the opportunity to remain invested in an investment trust that has a mandate that is similar to AUSC's.
· Strong performance: JUGI has a strong NAV total return performance, having delivered 13.5 per cent., 46.2 per cent., -1.5 per cent. and 155.2 per cent. versus its composite benchmark return of 15.3 per cent., 36.2 per cent., 2.0 per cent. and 69.6 per cent. over 1, 3, 5 and 10 years respectively to 31 August 2026, and has a track record of alpha generation across a variety of market conditions.
· Attractive dividend policy: JUGI has an enhanced dividend policy of paying an annual dividend based on 4 per cent. of NAV (calculated as at the end of the preceding financial year), paid quarterly, drawing from both income and realised capital returns. This approach delivers an attractive and regular income for investors, without impacting the way JUGI's portfolio managers manage JUGI's investments.
· Complementary shareholder base: There is considerable overlap between AUSC's and JUGI's top shareholders, potentially offering eligible AUSC shareholders the opportunity to consolidate their investments into a larger, more liquid trust.
· Scale, market liquidity and marketability: Post-transaction, the enlarged JUGI would be one of the largest investment trusts in the AIC UK Smaller Companies sector. The enlarged JUGI would offer greater secondary market liquidity, additional cost efficiencies, and by virtue of its size, greater attention from wealth managers and appeal to retail investors.
· Value for money and lower ongoing charges: conditional on the Proposals becoming effective, JUGI will benefit from a reduced management fee structure of 0.60 per cent., chargeable on net assets up to £200 million, and 0.55 per cent. chargeable on net assets in excess of £200 million. JUGI already has a competitive ongoing charges ratio of 73 bps. Following completion of the Proposals it is estimated that the ongoing charges ratio of enlarged JUGI will be 70 bps, being an 11 bps and 3 bps reduction as compared with AUSC's and JUGI's current ongoing charges ratios2.
· Ability to stay invested in a tax efficient manner: Eligible AUSC Shareholders who elect or are deemed to elect for the Rollover Option are expected to be able to do so without triggering a charge to UK capital gains tax.
· Substantial cash exit available: AUSC shareholders will have the option to realise some or all of their holding in the Company for cash, at the Company's Residual NAV less a 2 per cent. discount, subject to an aggregate cap of 35 per cent. of AUSC's issued share capital.
· JPMF's commitment and financial contribution: JPMF, the investment manager of JUGI and a market leader in UK investment trusts with AUM of £16.0 billion, will make a substantial financial contribution to the Proposals, a proportion of which is expected to benefit eligible AUSC shareholders who elect for the Rollover Option. In addition, JPMF is making a separate contribution, post-transaction, to the enlarged JUGI's marketing and promotional activities, which will benefit all shareholders of the enlarged JUGI.
JPMF cost contribution
JPMF has agreed to contribute the following amounts, calculated by reference to the management fees at the prevailing marginal management fee rate on the value of the assets rolling into JUGI, comprising:
a) An amount equivalent to 12 months of such management fees to be applied, as required and as set out below, in the calculation of the two companies' FAVs for the purposes of determining entitlements under the Rollover Option (the "Management Fee Waiver"); and;
b) a one-off contribution post-transaction to the enlarged JUGI marketing and promotional expenses equal in value to three months' management fees on the value of assets rolling over, which would benefit all shareholders of the enlarged JUGI.
Allocation of the Cash Option Discount and the Management Fee Waiver
The Cash Option Discount and the Management Fee Waiver are to be used in the FAV calculations to defray some or all of the Proposal Costs for all continuing shareholders in enlarged JUGI. If the Cash Option were taken up in full, it is anticipated that the Cash Option Discount and the Management Fee Waiver would be sufficient to offset fully the Proposal Costs for all continuing shareholders in the enlarged JUGI.
It is intended that the Cash Option Discount would first be applied to offset the Proposal Costs incurred by the AUSC shareholders who have elected, or been deemed to have elected, for the Rollover Option. It is intended that the Management Fee Waiver would first be applied to offset the Proposal Costs incurred by JUGI. To the extent that there remain any balances of the Cash Option Discount and the Management Fee Waiver after being so allocated, such balances would be used to offset any remaining Proposal Costs of the other party. Any amount of the Cash Option Discount and the Management Fee Waiver in excess of that which is needed to meet the Proposal Costs of JUGI and of AUSC shareholders who have elected, or been deemed to have elected, for the Rollover Option, would be retained for the benefit of all shareholders in the enlarged JUGI.
Dividends
AUSC intends to pay an interim dividend (or dividends) in lieu of a final dividend for its financial year ended 30 June 2026 of at least the minimum size sufficient to ensure it maintains investment trust status. Any dividends that are declared prior to the Calculation Date but not paid to the respective company's shareholders nor accounted for in the respective NAVs as at the Calculation Date will be reflected in the respective FAVs and the calculation of the Cash FAV.
For the avoidance of doubt, AUSC shareholders who are deemed to elect for the Rollover Option will not qualify for any JUGI dividend with a record date before the effective date of the Scheme, but the New JUGI Shares will rank fully pari passu with the existing ordinary shares of JUGI for all dividends declared by JUGI on or after the date of issue.
It is intended that JUGI's dividend policy will remain unchanged following the implementation of the Proposals being, in the absence of unforeseen circumstances, an annual dividend equivalent to 4 per cent. of its NAV on the last business day of the preceding financial year, paid quarterly, irrespective of the level of income generated by the portfolio during the prevailing financial year.
Board
Following completion of the Proposals, it is expected that Manju Malhotra and Steve Russell, currently directors of AUSC, will join the board of JUGI.
Conditions and expected timetable
Implementation of the Proposals is subject to a number of conditions, including:
· necessary shareholder approvals from the shareholders of AUSC and JUGI being obtained;
· certain tax clearances being received from HMRC by AUSC;
· the passing of JUGI's continuation vote at its AGM expected to be held on 23 November 2026; and
· admission of the New JUGI Shares to trading on the Main Market of the London Stock Exchange.
AUSC will publish a circular setting out full details of the Proposals and convening the necessary general meetings to implement the Scheme. At the same time, JUGI will publish a circular to convene a general meeting of JUGI shareholders to approve the issue of New JUGI Shares pursuant to the Proposals. It is anticipated that such shareholder documentation will be published in late October/early November 2026.
Subject to the relevant conditions being satisfied, it is expected that the Scheme would be completed by the end of 2026 or shortly thereafter.
The expected timetable in respect of the Scheme remains subject to change.
All references to shares in issue or issued share capital exclude treasury shares.
City Code
In accordance with customary practice for such schemes of reconstruction pursuant to section 110 of the Insolvency Act 1986 involving investment companies, the City Code on Takeovers and Mergers is not expected to apply to the combination.
Performance figures used in this announcement are sourced from Morningstar.
Note 1: The benchmark for the JUGI strategy is the Numis Smaller Companies plus AIM (excluding Investment Companies) Index. Prior to 1st January 2019, JUGI's benchmark was the FTSE Small Cap Index (excluding Investment Trusts). The benchmark index returns quoted above for 10 year cumulative return is a composite of the two indices.
Note 2: Historic OCRs, and reductions thereto, are with reference to the OCRs of AUSC and JUGI presented in their half year reports for the periods to 31 December 2025 and 31 January 2026, respectively.
Enquiries:
Aberdeen UK Smaller Companies Growth Trust plc Contact via Winterflood
Liz Airey (Chairman)
Winterflood, a division of Marex +44 (0) 20 3100 0000
Neil Morgan Haris Khawaja (Corporate Finance)
Innes Urquhart (Sales)
Aberdeen Corporate Secretary Limited cef.cosec@aberdeenplc.com
Gordon Hay Smith (Company Secretary)
Important Information
The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The material contained in this announcement is given as at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment. In particular, any proposals referred to herein are subject to revision and amendment.
The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of such jurisdictions.
The New JUGI Shares have not been, and will not be, registered under the U.S. Securities Act of 1933 (as amended) (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an exemption from registration under the Securities Act. Moreover, the New JUGI Shares have not been, nor will they be, registered under the applicable securities laws of Australia, Canada, Japan, New Zealand, the Republic of South Africa, or any member state of the EEA (other than any member state of the EEA where the shares are lawfully marketed). Further, JUGI is not, and will not be, registered under the US Investment Company Act of 1940, as amended.
The value of shares and the income from them is not guaranteed and can fall as well as rise due to, inter alia, stock market and currency movements. When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance should not be considered a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations.
This announcement contains statements about the Company that are or may be deemed to be forward looking statements. Without limitation, any statements preceded or followed by or that includes the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance of the negative thereof, may be forward looking statements. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding financial position, strategy, plans, proposed acquisitions and objectives of AUSC or the enlarged JUGI, are forward looking statements.
These forward looking statements are not guarantees of future performance. Such forward looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statement. Due to such uncertainties and risks, readers should not rely on such forward looking statements, which speak only as of the date of this announcement, except as required by applicable law. Subject to their respective legal and regulatory obligations, AUSC expressly disclaims any obligations or undertaking to update or revise any forward looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required to do so by law or any appropriate regulatory authority, including FSMA, the Listing Rules, the Prospectus Rules: Admission to Trading on a Regulated Market, the Disclosure Guidance and Transparency Rules, the Public Offers and Admission to Trading Regulations 2024 and MAR.
None of AUSC or any of its affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to any of them, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. Each of AUSC and its respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.
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