REG-Barings Emerging EMEA Opportunities Plc: Circular re continuation vote and update on the future strategy of the Company

Barings Emerging Emea OpportunitiesAnnouncement

02/10/2025 07:02

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT
LAWS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Baring Emerging EMEA Opportunities PLC (the "Company")

Continuation Vote, update on the future strategy of the Company and
publication of a circular

Introduction

Following a period of consultation with Shareholders holding a significant
proportion of the Company's issued share capital, the Company today announces
proposals for the continuation and future strategy of the Company (the
"Proposals"). The Proposals are intended to offer Shareholders protections in
relation to the performance of the Company and the discount to NAV at which
the Shares trade, along with an enhanced investment proposition.

The Board considers it important that Shareholders should have the opportunity
to partake in the decision regarding the future of the Company. Hence, the
Board is offering Shareholders the opportunity to vote on the continuation of
the Company as it is presently constituted (the "Continuation Resolution").

Subject to Shareholders approving the continuation of the Company, it is
intended to continue the Company as it is presently constituted without making
a tender offer, which would materially reduce the size of the Company.

The Company has today published a circular (the "Circular") which contains
further detail on the Proposals and a notice of general meeting (the "General
Meeting"). Shareholder approval will be sought for the continuation of the
Company at the General Meeting. The General Meeting will be held at 2.30 p.m.
on 21 October 2025 at 20 Old Bailey, London EC4M 7BF.

Background to, and reasons for, the Proposals

In October 2020, the Company announced proposals for the future of the
Company, which were approved by Shareholders at a general meeting. Those
proposals included changes to the Company's investment policy to broaden the
geographic scope of the Company's portfolio, as well as a change to its name
and the management fee. 

The 2020 proposals also set out a tender offer trigger mechanism (the "Tender
Offer Trigger Mechanism"). Pursuant to this mechanism, Shareholders would be
given the opportunity of selling some of their Shares in a tender offer for up
to 25 per cent. of the Company's issued share capital if either:

(a)                         the average daily discount
of the Company's market share capital to its net asset value (`cum-income')
exceeded 12 per cent. as calculated with reference to the trading of the
Company's Shares for the period between 1 October 2020 and 30 September 2025
(the "Calculation Period"), (the "Discount Trigger"); or

(b)                         the performance of the
Company's net asset value on a total return basis did not exceed the return of
the Company's benchmark by an average of 50 basis points per annum over the
Calculation Period (the "Performance Trigger").

Since the beginning of the Calculation Period on 1 October 2020, the Company
has performed well. The Company has outperformed its benchmark, the MSCI
Emerging Markets EMEA Index (the "Benchmark"), by 1.4 per cent annualised
(unaudited). Particularly strong performance was delivered over the last two
years. However, Russia's invasion of Ukraine and the resultant sanctions have
had a material impact on the Company. Russian assets represented approximately
17.6 per cent. of the Company's net assets as at 25 February 2022. The
implementation of sanctions on that date necessitated writing down the
Company's Russian assets to zero. After these events, the Company's Shares
traded at a wider discount relative to NAV. Over the Calculation Period, the
average daily discount of the Shares was 16.8 per cent.

Therefore, whilst the Company's performance has been strong and has exceeded
the target set by the Performance Trigger, the average discount has exceeded
the 12 per cent. target and so the Discount Trigger has been met.

The Board is of the opinion that a tender offer of up to 25 per cent. at this
time would not be in the best interests of the Company or Shareholders. If
taken up, such tender would significantly reduce the size of the Company and
the liquidity of the Shares, and would increase the Company's cost ratios
beyond what the Board considers to be an acceptable level. These factors taken
together would reduce the ongoing viability of the Company to such an extent
that continuation of the Company in its current structure post a tender offer
of up to 25 per cent. would be challenging.

As stated in the Company's annual report for the year ended 30 September 2024
(the "Annual Report"), the Board have therefore been considering alternative
proposals for the future direction of the Company. The Board has had
discussions with its advisers and Shareholders holding a significant
proportion of the Company's issued share capital. As a result, the Board is
today offering Shareholders the opportunity to vote on the continuation of the
Company as it is presently constituted.

In connection with this review, the Board, together with its advisors, have
also been considering the future strategy of the Company should the
Continuation Resolution be passed. The aim is to enhance Shareholder value and
narrow the discount at which the Shares are currently trading. Following this
review, the Board are pleased to announce an enhanced discount control
mechanism and dividend policy, and updates to the Company's investment
strategy. Further details of these are set out below.

Introduction of a 100% Conditional Tender Offer and Annual Continuation Votes

Following a period of consultation with Shareholders holding a significant
proportion of the Company's issued share capital and after discussion with the
Company's advisors, the Board is of the opinion that a tender offer at this
time would not be in the best interests of the Company or Shareholders given
the impact a tender offer for up to 25 per cent. would have on the future
viability of the Company. However, the Board considers it important that
Shareholders should have the opportunity to partake in the decision regarding
the future of the Company. Hence, the proposal of the Continuation Resolution.

The Board is aware of Shareholders' interests in narrowing the discount and
maximising future returns. Accordingly, if the Continuation Resolution is
passed, the Board will implement strategic measures with the intention of
achieving these results.

In addition, if the Continuation Resolution is passed, the Board will
implement a revised tender offer trigger mechanism. Under the revised
mechanism, Shareholders will be offered a tender offer for 100 per cent. of
the Company's issued share capital if the performance of the Company's NAV
does not exceed the return of the Benchmark for the period between 1 October
2025 and 30 September 2028 (the "Revised Performance Trigger"). Alongside
this, the Board will provide Shareholders with the opportunity to vote on the
continuation of the Company annually, at each annual general meeting of the
Company, from the annual general meeting in respect of the year ending 30
September 2026, expected to be held in January 2027.

In the event the Continuation Resolution is not passed, the Directors shall
draw up proposals for the future of the Company, which may include proposals
for the voluntary liquidation, restructuring or reorganisation of the Company.

Shareholders should be aware that, in light of the sanctions related to the
ongoing war between Russia and Ukraine, it is unlikely that the Company will
be able to realise any of its remaining Russian assets or repatriate income
accruing on any sanctioned accounts in the short term. Accordingly, any
liquidation of the Company, including as part of a scheme of reconstruction,
would likely mean giving up the future possibility of realising any value from
the Company's remaining Russian assets which are currently valued at zero
(noting that Russian assets represented approximately 17.6 per cent. of the
Company's net assets as at 25 February 2022).

Share Buybacks

The Company does not have in place a formal discount control mechanism;
instead, the Board effects Share buybacks opportunistically where it considers
this is in the interests of Shareholders, and would be effective in enhancing
Shareholder value. As noted above, following Russia's invasion of Ukraine and
the subsequent sanctions, the Company's Shares traded at a wider discount
relative to NAV. Against this backdrop, the Board did not consider buybacks an
effective way of delivering value to Shareholders. However, noting the steady
improvement of the performance of the Company and the relative value of the
Shares, the Board now believes that buybacks, going forward, may provide a
useful tool in seeking to maintain a narrower discount, on average, than
occurred over the last five years.  

At the Company's 2025 annual general meeting, a special resolution was passed
by Shareholders granting the Company authority to buy back a total of
1,768,355 Shares representing approximately 14.99 per cent. of the then issued
share capital (excluding Shares held in treasury). As at 30 September 2025,
(being the latest practicable date prior to the publication of this document),
the Company has bought back 74,681 Shares pursuant to this authority. The
Company therefore has ample remaining authority to enact a more active buyback
programme.

Shares will only be bought back when the Directors believe it is in the
interests of Shareholders as a whole and when this offers sufficient value to
Shareholders.

Dividend Policy

The Company currently aims to generate an attractive income for Shareholders
and has the ability to pay up to 1 per cent. per annum of NAV from capital to
Shareholders. Noting the recent strong performance of the Company's portfolio,
the Board has, subject to the passing of the Continuation Resolution,
committed to a new progressive dividend policy with the intention of paying an
increased dividend each financial year, with effect from the year ended
September 2025. It is expected that this dividend will be paid from a
combination of both income and capital and the Board will not be bound by the
previous policy of only paying up to 1 per cent. per annum of NAV from capital
each year.

The Directors consider that the new dividend policy should have the dual
effect of enhancing the Company's appeal to future investors, in particular
retail shareholders, whilst increasing value returned to existing
Shareholders.

There is no change to the Company's investment policy as a result of the
revised dividend policy, and the Company will continue to focus on capital
growth.

Investment Strategy

The Board is pleased with the recent strong performance of the Company and in
particular the outperformance of the Company against the Benchmark over the
Calculation Period.

The Board, together with the Investment Manager, has been assessing ways to
build on this recent strong performance, and deliver competitive returns to
Shareholders. The Board and the Investment Manager recognise that the existing
investment strategy has proved successful. The Investment Manager intends to
make greater use of the capacity afforded within the Company's investment
policy, to increase the concentration of the portfolio to up to around 35
holdings. At 30 September 2025, the Company's investment portfolio was made up
of 49 holdings. The Investment Manager believes that reducing the number of
investments within the Company's portfolio to up to around 35 holdings will
effectively balance the benefits of increased alpha generation, whilst not
introducing excessive risk into the portfolio. The Board and the Investment
Manager are of the opinion that the current environment and market outlook
continues to favour a high-conviction approach.

To coincide with this approach, the Investment Manager also intends to
reintroduce gearing (as permitted within the Company's investment policy) into
the portfolio, through the use of index futures. Exposure to index futures
will complement the core investment strategy of generating long-term alpha
through stock-picking by enhancing total returns based on the Investment
Manager's views on likely broader movements of the markets in the geographic
scope of the Company's investment policy. The decision to use futures as a
means of gearing has been taken as futures afford greater flexibility for
short term application, and are currently attractively low-cost as compared to
borrowing. Any use of gearing will be within the scope of the Company's
investment policy. Gearing will only be used when the Investment Manager has a
high level of confidence that it would add significant value to the portfolio.

For the avoidance of doubt, no changes are being made to the Company's current
investment policy or objective as a result of the enhancements set out above.

The Board and the Investment Manager believe that the combination of these two
enhancements will allow the Investment Manager to continue to deliver
competitive returns for Shareholders.

Benefits of the Proposals

The decision to vote for or against the Continuation Resolution is a matter
for each individual Shareholder to decide. However, the Board recommends that
Shareholders vote in favour.

In making their decision, Shareholders may wish to consider, among other
things, the matters set out below:
* if the Continuation Resolution is not passed, and on the basis that a
significant tender offer at this time would not be in the interests of the
Company or Shareholders, the Company will put forward proposals to
Shareholders for the restructuring, reorganisation or winding up of the
Company. Such proposals may mean giving up the future possibility of realising
any value from the Company's Russian assets, which are currently valued at
zero within the Company's portfolio. Any such proposals would also result in
the Company incurring additional costs in formulating those proposals; 
* if the Continuation Resolution is passed, the Board will implement an
improved dividend policy and enhancements to the Company's investment
proposition and also proposes to be more active in the use of Share buybacks
with the aim of seeking to maintain a narrower discount, on average, than
occurred over the last five years, thereby increasing returns to Shareholders;

* if the Continuation Resolution is passed, the Board will provide
Shareholders with the opportunity to vote on the continuation of the Company
annually, at each general meeting of the Company, from the annual general
meeting in respect of the year ending 30 September 2026, expected to be held
in January 2027; and 
* if the Continuation Resolution is passed, the Board will implement a revised
tender offer trigger mechanism pursuant to which Shareholders will, subject to
obtaining Shareholder approval at the time, be provided with a tender offer
for 100 per cent. of the Company's issued share capital if the Revised
Performance Trigger is activated.
General Meeting

The General Meeting will be held at 20 Old Bailey, London EC4M 7BF at 2.30
p.m. on 21 October 2025, at which Shareholders will be asked to consider and,
if thought fit, approve the Continuation Resolution as an ordinary resolution.

To be passed, a simple majority of the votes cast by members entitled to vote
and present at the General Meeting in person or by proxy must be cast in
favour of the Continuation Resolution.

The full text of the Continuation Resolution is set out in the notice of
General Meeting at the end of the Circular.

Recommendation

The Board considers that the approval of the Continuation Resolution is in the
best interests of the Company and its Shareholders as a whole. Accordingly,
the Board unanimously recommends that Shareholders vote in favour of the
Continuation Resolution to be proposed at the General Meeting.

Expected Timetable

 Publication of the Circular                             2 October 2025                
 Latest time and date for receipt of proxy appointments  2.30 p.m. on 17 October 2025  
 General Meeting                                         2.30 p.m. on 21 October 2025  
 Results of the General Meeting announced                21 October 2025               

Note: Any defined terms have the same meaning as set out in the Circular. All
references to time are to UK time.

 

Enquiries

 Baring Emerging EMEA Opportunities PLC Frances Daley (Chairman)  Via J.P. Morgan Cazenove  
 J.P Morgan Cazenove William Simmonds, Rupert Budge               +44 (0) 20 3493 8000      
 Quill PR Sarah Gibbons-Cook                                      +44 (0)20 7466 5050       

 



Copyright (c) 2025 PR Newswire Association,LLC. All Rights Reserved