LON:BRFI | Help Needed - Tender Offer (Closed End Fund)

4th Feb '21 by Matthew Wood

3 comments 837 reads

Hi,

I've received a voluntary corporate action notification in relation to my holdings in BlackRock Frontiers Investment Trust (Blackrock Frontiers Investment Trust (LON:BRFI)).

Having read the circular (several times) I understand the following:

- Two Blackrock entities have formed a "Concert Party" and wish to purchase ~39m shares of the fund (c16% of o/s shares)

- Current shareholders can opt to tender all or some of their shares (or take no action - default)

- The sale price will be the "Final Tender Offer Asset Value" which will be the value of all the tendered shares divided by the number of tendered shares

I presume the final tender price will likely be very similar to the market value at the time, so is this simply a case of do I want to continue to hold or sell on this specified date? Or is there more to consider in this situation?

Any information or past experience would be greatly appreciated.

Thanks,

Matt

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sparkle1

4th Feb '21

Hi, I am also a bit confused but my understanding (please correct if i'm wrong): historically pre Covid the share price traded above its net asset value. Since Covid, the price is lower than the net asset value. The company seems to think that by selling off 16% or so, this might be a mechanic to make the price and asset value align. They are giving opportunity to sell at asset value price less costs. If the stock was in demand, they would not need to do this - its just an instrument for making the two prices align. It also makes the company smaller so i guess they must want to liquidate some. It is underperforming its benchmark index by quite a long way too. Its not really endangering the investment fund - its just giving people the ability to get out at the asset value less costs and depending on when you bought (3 years ago: no. 6 months ago: yes). That's how i see it. Apart from the odd day its always been a dog for me! So i think i'm taking the opportunity to sell half on market and leaving half and see where they end up as where they invest might come good but i'm lowering risk. No idea if this is the right thing to do...

Matthew Wood

5th Feb '21

Thanks for your input, much appreciated.

I picked up in Nov for 104p so it’s been pretty decent for me. I’ll need to figure out what NAV is and make a call based on that - I trust the tender price will not be a lowball.

Albm7

Hi, (I hold) the purpose of the tender offer is to give holders the opportunity to redeem shares at the NAV - To see the daily NAV check the news for the trust - for this trust it is published daily. For the last 12 months it has nearly always been trading at a discount. I use trustnet website to see the premium/discount chart. To work out the NAV you would need to know all the holdings and price them up.

Help needed - Tender Offer (Closed End Fund)

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Matthew Wood

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