REG-Fidelity Emerging Markets Ltd: Share Repurchase Agreement

Fidelity Emerging MarketsAnnouncement

02/09/2025 07:02

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

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

2 September 2025

For Immediate Release

Fidelity Emerging Markets Limited

 

Share Repurchase Agreement

 

The Board of Fidelity Emerging Markets Limited (the “Company”) announces
that the Company has entered into a conditional share repurchase agreement
(the “Repurchase Agreement”) with Strathclyde Pension Fund
(“Strathclyde”). Under the terms of the Repurchase Agreement the Company
will, subject to obtaining the required shareholder approval, purchase
Strathclyde’s entire beneficial holding of 16,441,177 Participating
Preference Shares ("PP Shares") in the Company (the “Strathclyde Shares”),
which represents 25.7 per cent. of the Company’s aggregate voting share
capital as at 29 August 2025 by way of a market acquisition in accordance with
section 315 of the Companies (Guernsey) Law, 2008 (as amended) (the
"Repurchase").

Strathclyde has agreed to sell all of the Strathclyde Shares at a price per PP
Share representing a discount of 14 per cent. to the net asset value ("NAV")
per PP Share as at close of business two business days prior to the completion
date in respect of the Repurchase. For the purpose of the Repurchase, the NAV
is calculated cum income and with borrowings at market value. All of the
Strathclyde Shares will be cancelled following repurchase.

Given the size of Strathclyde's holding, the Repurchase may only be effected
following the passing of a resolution of the Company's shareholders at an
Extraordinary General Meeting authorising the Repurchase. The Board will
therefore publish a circular in due course, in which further details of the
Repurchase will be set out, together with notice of an Extraordinary General
Meeting of the Company at which approval will be sought (by way of special
resolution) from shareholders for the Repurchase. The Repurchase is expected
to complete in early November 2025.

Major shareholders have indicated they are supportive of the Repurchase.

The Board believes that the Repurchase is in the best interests of the Company
and shareholders as a whole. There will be an immediate financial benefit that
will accrue to ongoing shareholders, as there will be an estimated uplift to
the NAV per PP Share of approximately 4 per cent.1.. Assuming the Repurchase
is approved and effected, the Board considers that the costs of running the
Company should remain competitive as compared to other closed-ended investment
companies within the Association of Investment Companies’ Global Emerging
Markets sector. Furthermore, the Board reaffirms its proactive approach to
buying back shares, and going forward is prepared to do so in accordance with
its ambition that the discount to net asset value at which the Company's
shares trade may ultimately be maintained in single digits in normal market
conditions on a sustainable basis.


(1.) Based on the NAV per PP Share as at 29 August 2025 and estimated direct
and indirect costs of the Repurchase.

Update on the Company

Performance comparison in GBP (%)

               Year to date (to 31 July 2025)  1 year  3 years (cumulative)  
 NAV           16.5                            17.6    37.8                  
 Share price   20.0                            20.5    44.9                  
 Market index  11.2                            13.7    24.1                  

Source: Fidelity International, RIMES, as of 31 July 2025. Market index is the
MSCI Emerging Markets Index (Net). Performance is shown bid-bid with income
reinvested, in GBP, net of fees. Past performance cannot be relied upon as a
guide to future performance.

The Company has performed strongly, outperforming its market index in both NAV
and share price terms year to date, over 1 year and over 3 years. The discount
to NAV at which the Company's shares trade narrowed to under 10 per cent. at
the end of July 2025. Against this performance backdrop, the Board and the
portfolio managers are positive on the outlook for emerging markets over both
the short and longer terms and the Board is pleased to observe that the
extended investment toolkit available to the investment management team
(unique in its peer group given its extensive use of both long and short
positions) is having an appreciable impact on NAV performance.

Continuation Vote and Conditional Tender

The Company has committed to hold a continuation vote in 2026 and every five
years thereafter. The Board re-confirms its intention to propose a
continuation vote at the 2026 AGM.

The Company reconfirms its commitment to undertake a tender for up to 25 per
cent. of its then shares in issue (excluding any shares held in treasury)
should its NAV total return fail to exceed the benchmark over the five years
ending on 30 September 2026.

Related Party Transaction

Strathclyde is a related party of the Company for the purposes of the UK
Listing Rules on account of the size of its shareholding in the Company.
Accordingly, the entry into the Repurchase Agreement is a related party
transaction which falls within UKLR 8.2.1R. The Board, which has been so
advised by Dickson Minto Advisers LLP, considers that the Repurchase is fair
and reasonable as far as shareholders are concerned. In providing its advice,
Dickson Minto Advisers LLP has taken into account the Board’s commercial
assessments.

The Takeover Code

The Takeover Code (the “Code”) applies to the Company. Under Rule 9 of the
Code, any person who acquires an interest in shares which, taken together with
shares in which that person or any person acting in concert with that person
is interested, carry 30 per cent. or more of the voting rights of a company
which is subject to the Code is normally required to make an offer to all the
remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with that
person, is interested in shares which in the aggregate carry not less than 30
per cent. of the voting rights of such a company but does not hold shares
carrying more than 50 per cent. of the voting rights of the company, an offer
will normally be required if such person or any person acting in concert with
that person acquires a further interest in shares which increases the
percentage of shares carrying voting rights in which that person is
interested. An offer under Rule 9 must be made in cash at the highest price
paid by the person required to make the offer, or any person acting in concert
with such person, for any interest in shares of the company during the 12
months prior to the announcement of the offer.

Under Rule 37.1 of the Code, when a company repurchases its own voting shares,
any resulting increase in the percentage of shares carrying voting rights in
which a person is interested is treated as an acquisition for the purpose of
Rule 9.  However, Note 1 on Rule 37.1 also provides that a person who comes
to exceed the limits in Rule 9.1 in consequence of a company’s redemption or
purchase of its own shares will not normally incur an obligation to make a
mandatory offer unless that person is a director, or the relationship of the
person with any one or more of the directors is such that the person is, or is
presumed to be, acting in concert with any of the directors.

The Company notes that as at 29 August 2025, City of London Investment
Management Company ("CoL") (the Company's largest shareholder) held 18,653,177
PP Shares (being 29.2 per cent. of the Company's aggregate voting share
capital as at 29 August 2025). If the Repurchase is effected, on the basis of
its current shareholding, CoL would come to hold 39.3 per cent. of the
Company's aggregate voting share capital following the Repurchase.
Accordingly, the completion of the Repurchase would, on the basis of current
shareholdings, result in CoL coming to have an interest in shares in the
Company carrying 30 per cent. or more of the voting rights of the Company.

On the basis that CoL does not have a representative on the board of the
Company and is not acting in concert with any of the directors, The Panel on
Takeovers and Mergers (the "Panel") has confirmed that the repurchase will not
trigger an obligation for CoL under Rule 9 of the Code.  

On completion of the Repurchase, CoL will hold more than 30 per cent. but less
than 50 per cent. of the voting share capital of the Company and therefore may
not acquire further shares in the Company without incurring an obligation
under Rule 9 of the Code to make a general offer to the Company's other
shareholders.

The Panel has also confirmed that the Company’s repurchase of its own shares
pursuant to its general share buyback authority granted at the most recent AGM
will not trigger an obligation for CoL under Rule 9 of the Code to make a
general offer to the Company's other shareholders.

A further announcement will be made upon publication of the shareholder
circular.


Enquiries:

Fidelity Emerging Markets Limited

Heather Manners (Chair)

via FIL Investments

FIL Investments International (Manager and Company Secretary)

George Bayer + 44 (0) 20 7961 4240

Dickson Minto Advisers (Financial Adviser)

Douglas Armstrong +44 (0)20 7649 6823

Belinda Beresford +44 (0)20 7649 6948

Jefferies International Limited (Broker)

Gaudi Le Roux +44 (0)20 7029 8000

 

Important Information

This announcement contains information that is inside information for the
purposes of the Market Abuse Regulation (EU) No 596/2014 as implemented in the
UK. The person responsible for arranging for the release of this announcement
on behalf of the Company is Heather Manners, Chair.

Legal Entity Identifier (LEI): 213800HWWQPUJ4K1GS84



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