REG - AVI Japan Opport.Tst - Rollover from Fidelity Japan Trust Plc ("FJV")

AVI Japan Opportunity TrustAnnouncement

12/08/2025 07:02

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250812:nRSL8801Ua&default-theme=true

RNS Number : 8801U  AVI Japan Opportunity Trust PLC  12 August 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, TO U.S. PERSONS, OR
IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH
AFRICA OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A
VIOLATION OR BREACH OF ANY APPLICABLE LAW.

12 August 2025

AVI Japan Opportunity Trust plc

("AJOT" or the "Company")

Rollover from Fidelity Japan Trust Plc ("FJV")

The Boards of AJOT and FJV are pleased to confirm that non-binding heads of
terms have been agreed for the proposed rollover of the assets of FJV into
AJOT.

The proposed combination will be undertaken through a scheme of reconstruction
of FJV under section 110 of the Insolvency Act 1986 (the "Scheme" or
"Transaction"), under which FJV shareholders will be entitled to elect to
receive either: i) new shares in AJOT (the default option) (the "AJOT Rollover
Option"); or ii) a cash exit, which will be limited to 50% of FJV shares in
issue (excluding treasury shares), at a 1% discount to formula asset value
("FAV") per share (the "Cash Option").

Asset Value Investors ("AVI") will continue to manage the enlarged AJOT
portfolio in accordance with AJOT's existing investment objective and
investment policy.

The Transaction is supported by FJV's largest shareholder, City of London
Investment Management, which holds approximately 23.2% of FJV's issued share
capital (excluding treasury shares).

Benefits of the Transaction

The Transaction is expected to result in the following substantial benefits
for both AJOT shareholders and FJV shareholders rolling over into AJOT:

·    Continued attractive exposure to Japanese equities: AJOT has a
clearly defined investment philosophy which seeks to exploit material
undervaluation amongst Japanese equities via careful stock selection and
active engagement with management, boards and other stakeholders. AJOT is,
therefore, well-positioned to profit from the ongoing corporate governance
reform in Japan.

 

·    Strong investment performance track record: since its inception AJOT
has delivered strong performance driven by structural change in Japan, with a
net asset value ("NAV") total return of 102%, materially in excess of the 41%
recorded for the MSCI Japan Small Cap Index and 53% recorded for the TOPIX
index. Over this period, AJOT has been one of the top performing funds in the
Japan Smaller Companies sector (as well as against all eight remaining
Japanese investment trusts).

 

·    Scale: a combination of AJOT and FJV should result in both sets of
shareholders benefiting from a more liquid, larger fund, targeting attractive
investment opportunities in Japanese equities.  The enlarged AJOT is also
expected to have increased capability to take influential positions in
companies where AVI has identified a significant opportunity to unlock value
through AVI's active engagement, in line with AJOT's existing investment
strategy. Assuming full take up of the Cash Option, the enlarged AJOT is
expected to have net assets in excess of £370 million.

 

·    Improved share rating: potential for material uplift in the market
value for FJV shareholders due to the narrower discount to NAV at which AJOT's
shares traded compared with FJV shares. Since AJOT's IPO on 23 October 2018 to
7 August 2025, the latest practicable date ahead of this announcement, AJOT's
shares have traded at an average discount of 0.18% to NAV versus 9.24% average
discount to NAV for FJV.

 

·    Discount control mechanisms: AJOT already has in place discount
control mechanisms including AJOT's uncapped annual realisation opportunity.
It is intended that the Transaction will complete in time to enable FJV
shareholders who roll over into AJOT to participate in the next opportunity in
Q4 2025.

 

·    Reduced management fee: subject to completion of the Scheme, AVI has
agreed to reduce its management fee from 1% per annum (based on the lower of
market capitalisation or NAV) to a tiered structure on assets above £300
million. Additionally, 25% of the fee will continue to be reinvested by AVI
into AJOT shares.

 Tier (lower of market capitalisation or NAV)  Annual management fee
 Less than £300 million                        1.0%
 £300 million to £350 million                  0.95%
 Greater than £350 million                     0.90%

 

·    Cost Contributions: the costs of the Transaction will be mitigated
for the benefit of both existing AJOT and FJV shareholders rolling over into
AJOT through the Cost Contributions, as further described below.

 

The Scheme

The Scheme will be implemented through a scheme of reconstruction of FJV under
section 110 of the Insolvency Act 1986. This will result in the voluntary
liquidation of FJV and the transfer of certain of FJV's assets to AJOT in
consideration for the issue of new ordinary shares of AJOT (the "New AJOT
Shares") to FJV shareholders who elect (or are deemed to elect) for the AJOT
Rollover Option.

New AJOT Shares will be issued as the default option under the Scheme in the
event that FJV shareholders do not make a valid election under the Scheme or
only elect for the Cash Option in respect of a proportion of their FJV shares,
or to the extent elections for the Cash Option are scaled back as a result of
the Cash Option being oversubscribed.

The number of New AJOT Shares issued to FJV shareholders will be determined on
a FAV-to-FAV basis which will be outlined in further detail in the Scheme
document to follow.

In accordance with customary practice for such transactions involving
investment trusts, the City Code on Takeovers and Mergers is not expected to
apply to the Scheme. The Scheme will be subject, amongst other things, to the
formal approvals of the FJV shareholders and AJOT shareholders, as well as
necessary regulatory approval and tax clearances. Shareholders do not need to
take any action at this time.

Under the agreed heads of terms, FJV's unquoted assets held immediately prior
to the effective date of the Scheme will, subject to any consents required, be
transferred to AJOT at the Scheme effective date and that the majority of the
remaining other FJV assets will be realised (and held in cash and
cash-equivalent investments) ahead of the Scheme effective date. Assuming full
take up of the Cash Option, it is expected that the unquoted assets would
comprise less than 5% of AJOT's enlarged NAV on completion of the Transaction.

As mentioned above, FJV shareholders will have the option to elect for the
Cash Option as part of the Transaction. The Cash Option will be priced at a 1%
discount to FAV per share (the "Cash Option Discount") as at a calculation
date to be agreed by AJOT and FJV less the further costs of any realisations
of assets allocated into the Cash Option pool, and limited to 50% of the FJV
shares in issue (excluding treasury shares).

The Cost Contributions

The Cash Option Discount is to be allocated to the AJOT Rollover Pool (being
the interests of FJV shareholders rolling over their shareholdings in FJV into
the enlarged AJOT) and AJOT respectively, based on the size of the elections
and deemed elections for the AJOT Rollover Pool as further described in the
Scheme document to follow, to provide an uplift to the AJOT Rollover Pool's
and AJOT's respective NAVs.

In the event that the AJOT Rollover Pool's share of the FJV Scheme costs and
investment management agreement termination costs (subject to an overall cap
of £1 million in total) are not fully covered by the Cash Option Discount
(the "Shortfall"), AVI will contribute to the Shortfall up to this £1 million
cap.

In the event that the Transaction is aborted, each party shall bear its own
costs.

AJOT Annual Realisation Opportunity

Forming part of AJOT's discount control mechanisms, AJOT shareholders have the
ability to realise on an annual basis, some, or all of their shares in AJOT.
In 2024, this was undertaken through an uncapped tender offer at a 2% discount
to the prevailing net asset value per share at the calculation date less any
transaction costs directly associated with the realising assets to satisfy
elections under the tender offer.

FJV shareholders who receive new AJOT shares pursuant to the Transaction are
expected to have the ability to participate in the 2025 realisation
opportunity.

Expected Timetable

It is intended that the documentation in connection with the Transaction will
be posted to each of AJOT and FJV shareholders as soon as practicable, with a
view to convening the general meetings of AJOT and FJV later in 2025 with the
Scheme becoming effective no later than the end of November 2025. Completion
of the Scheme will be conditional upon, inter alia, approval from the
shareholders of both companies, tax clearances and Financial Conduct Authority
approval in relation to the publication of the AJOT prospectus.

Norman Crighton, Chairman of AVI Japan Opportunities Trust Plc, said:

"We are pleased to have reached agreement with the Fidelity Japan Trust board
for a proposed rollover into AVI Japan Opportunity Trust. As AJOT set out last
year, and again in April 2025, we strongly believe that this combination could
unlock greater returns and continued outperformance for existing shareholders
of both trusts.

"An enlarged AJOT will have greater firepower to capitalise on what we
consider are once-in-a generation structural corporate governance reforms in
Japan, focusing on under-valuation in the vast opportunity set of smaller cap
Japanese equities, backed by AJOT's discount control mechanisms. We look
forward to engaging further with Fidelity Japan shareholders, and
demonstrating to them the value of AVI's differentiated process which has
continued to outperform the sector."

 

All data and performance figures are sourced from Morningstar and calculated
as at 7 August 2025 in GBP.

For further information, please contact:

AVI Japan Opportunity Trust plc

Norman Crighton

norman.crighton@ajot.co.uk (mailto:norman.crighton@ajot.co.uk)

 

MUFG Corporate Governance Limited (Company Secretary)

Eva Kulich

0333 300 1932

LEI: 894500IJ5QQD7FPT3J73

Singer Capital Markets Limited (Sole Sponsor and Joint Financial Adviser to
AJOT)

James Maxwell

James Waterlow

Asha Chotai

Anthony Debson

0207 496 3000

Marex Group (Joint Financial Adviser to AJOT)

Mark Thompson

Priyan Rayatt

0203 017 2697

KL Communications (Financial PR Adviser to AJOT)

Charles Gorman

Henry Taylor

020 3882 6644

This announcement contains information that is inside information for the
purposes of Article 7 of the UK version of Regulation (EU) No. 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as
amended (the Market Abuse Regulation). The person responsible for arranging
for the release of this announcement on behalf of AJOT is MUFG Corporate
Governance Limited. Upon the publication of this announcement, this
information is considered to be in the public domain.

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 value of shares and the income from them is not guaranteed and can fall as
well as rise due to 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 may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "may", "might",
"will" or "should" or, in each case, their negative or other variations or
similar expressions. All statements other than statements of historical facts
included in this announcement, including, without limitation, those regarding
AJOT's or FJV's respective financial positions, strategies, plans, proposed
acquisitions and objectives, are forward-looking statements.

Forward-looking statements are subject to risks and uncertainties and,
accordingly, AJOT's or FJV's actual future financial results and operational
performance may differ materially from the results and performance expressed
in, or implied by, the statements. These forward-looking statements speak only
as at the date of this announcement and cannot be relied upon as a guide to
future performance.

Subject to its legal and regulatory obligations, AJOT 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.

Singer Capital Markets ("Singer") which is authorised in the United Kingdom by
Financial Conduct Authority is acting as Sole Sponsor and Joint Financial
Adviser alongside Marex Group ("Marex") for AJOT and for no-one else in
connection with the Transaction, will not regard any other person as it client
in relation to the Transaction and will not be responsible to anyone other
than AJOT for providing the protections afforded to its clients or for
providing advice in relation to the Transaction, or any of the other matters
referred to in this announcement. This does not exclude any responsibilities
or liabilities of Singer or Marex under the Financial Services and Markets Act
2000, as amended, or the regulatory regime established thereunder.

None of AJOT, Singer or Marex, or any of their respective 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 by 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 AJOT,
Singers and Marex, and their 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCBRGDIDXBDGUB