REG - Gabelli Merchant. Gabelli Merch - GMPP - Half-year Financial Report
05/03/2026 07:05
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RNS Number : 4025V Gabelli Merchant Partners PLC 05 March 2026
Gabelli Merchant Partners Plc
Half Yearly Financial Report
For the half-year ended 31 December 2025
Gabelli Merchant Partners Plc (GMP-LN) is pleased to announce its unaudited
results for the half year ended 31 December 2025. The results will be uploaded
to the Company website:
https://www.gabelli.co.uk/investment-products/gabelli-merchant-partners/.
Portfolio Summary
Largest Portfolio Security holdings (excluding cash and cash equivalents)
As at 31 December 2025
Security¹ Offsetting short position² % of total Market value(4) Offsetting market % of total
portfolio(6)
$000
value(5)
portfolio(3)
(gross)
$000
(net)
U.S. Treasury Bill 12 Mar 2026 12.1 8,443 - 12.1
U.S. Treasury Bill 19 Mar 2026 7.1 4,963 - 7.1
U.S. Treasury Bill 27 Jan 2026 6.4 4,489 - 6.4
U.S. Treasury Bill 05 Mar 2026 4.3 2,982 - 4.3
U.S. Treasury Bill 14 May 2026 4.2 2,962 - 4.2
U.S. Treasury Bill 15 Jan 2026 4.1 2,896 - 4.1
Frontier Communications Parent Inc 3.9 2,720 - 3.9
U.S. Treasury Bill 26 Mar 2026 3.5 2,480 - 3.5
U.S. Treasury Bill 25 Jun 2026 3.5 2,458 - 3.5
Dayforce Inc 2.6 1,850 - 2.6
Chart Industries Inc 2.6 1,784 - 2.6
Electronic Arts Inc 2.5 1,767 - 2.5
Exact Sciences Corp 2.3 1,620 - 2.3
Avidity Biosciences Inc 2.2 1,526 - 2.2
U.S. Treasury Bill 29 Jan 2026 2.1 1,496 - 2.1
Cidara Therapeutics Inc 2.1 1,469 - 2.1
Hologic Inc 1.9 1,296 - 1.9
Cyberark Software Ltd 1.8 1,276 - 1.8
TXNM Energy Inc 1.8 1,269 - 1.8
Sealed Air Corp 1.6 1,114 - 1.6
Sub-total Top 20 Holdings 72.6 50,860 - 72.6
Other holdings⁷ 27.4 19,028 (73 ) 27.4
Total holdings 100.0 69,888 (73 ) 100.0
1 Long position.
2 Offsetting position taken, based on the acquirer of the security
when acquirer stock is being offered in whole, or in part, to finance the
transaction.
3 Represents the total position value (market value plus the
offsetting market value) as a percentage of the total portfolio value.
4 Market value of the long position.
5 Market value of the offsetting position.
6 Represents the market value as a percentage of the total portfolio
value.
7 Includes derivatives and individual positions worth less than $750
thousand in market value.
Portfolio allocation as at 31 December 2025 %
Equities 50.9
Fixed income 48.9
Derivatives (contracts for difference) 0.2
Total 100.0
Financial Highlights
(Unaudited) (Unaudited) (Audited)
As at As at As at
Performance 31 December 2025 31 December 2024 30 June 2025
Net asset value per share(1) $ 10.69 $ 10.21 $ 10.50
Dividends per share paid during the year² $ 0.10 $ 0.16 $ 0.18
Share price(3) $ 8.50 $ 8.00 $ 9.05
Discount to Net Asset Value(4,5) 20.49 % 21.09 % 13.81 %
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
Total returns 31 December 2025 31 December 2024 30 June 2025
Net asset value per share(5,6) 2.79 % 2.65 % 6.51 %
U.S. 3-month Treasury Bill Index 3.65 % 4.34 % 4.34 %
Share price(5,)⁷ (5.01) % (9.08) % 3.11 %
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
Per Share Returns 31 December 2025 31 December 2024 30 June 2025
Total return per share $ 0.29 $ 0.25 $ 0.63
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
Ongoing charges(5,8) 31 December 2025 31 December 2024 30 June 2025
Annualised ongoing charges 1.89 % 2.09 % 2.00 %
Source: Portfolio Manager (Gabelli Funds, LLC), verified by the Administrator
(State Street Bank and Trust Company).
1 Net Asset Value (NAV) includes deferred tax asset balance sheet
adjustments resulting from the Group being a close company.
2 The dividend paid during the half year ended 31 December 2025 was
the second interim dividend for the fiscal year 30 June 2025. The Board has
continued to review and assess the Group's distribution policy.
3 See the Statement from the Chair for discussion regarding the
Specialist Fund Segment of the London Stock Exchange, on which the Group's
Ordinary Shares trade.
4 The amount by which the market price per share is lower than the
NAV per share, expressed as a percentage of the NAV per share.
5 These key performance indicators are alternative performance
measures. Further information regarding the use of alternative performance
measures can be found in the Annual Report and Accounts for the year ended 30
June 2025.
6 Net Asset Value per ordinary share, total return represents the
theoretical return on NAV per ordinary share, assuming that dividends paid to
shareholders were reinvested at the NAV per ordinary share at the close of
business on the day shares were quoted ex-dividend.
7 Share Price Total Return represents the theoretical return to a
shareholder, on a closing market price basis, assuming that all dividends
received were reinvested, without transaction costs, into the ordinary shares
of the Group at the close of business on the day the shares were quoted
ex-dividend.
8 Ongoing Charges are operating expenses incurred in the running of
the Group, but excluding financing costs. These are expressed as a percentage
of the average net asset value during the period and this is calculated in
accordance with guidance issued by the Association of Investment Companies.
Statement from the Chair
Introduction
Gabelli Merchant Partners Plc (the "Company" or "GMP") was incorporated in
England and Wales on 28 April 2017. Its shares trade under the symbol "GMP"
and have been listed on the Specialist Fund Segment of the Main Market of the
London Stock Exchange and the Official List of the International Stock
Exchange since 19 July 2017. In 2025 the Company changed its name from Gabelli
Merger Plus+ Trust Plc to Gabelli Merchant Partners Plc.
The Company's objective is to generate total returns, consisting of capital
appreciation and current income. Its secondary objective is the protection of
capital, uncorrelated to equity and fixed income markets. The Company has
broad and flexible investment authority and, accordingly, it may at any time
have investments in other related or unrelated areas.
The Company is classified as an investment company and accordingly is a member
of the Association of Investment Companies ("AIC"). GMP is a close company
and its largest shareholder, Associated Capital Group, Inc., is intent on
continuing with the listed vehicle and growing value in the markets in
accordance with the investment policy.
The Company's Ordinary Shares trade on the Specialist Fund Segment of the
London Stock Exchange. Secondary liquidity for the Company's Ordinary Shares
is available via the trading system known as SETSqx, which is an auction-based
trading process. It is quote based throughout the day, until the auctions at
U.K. times: 8am, 9am, 11am, 2pm and 4:35pm, when buyers and sellers can cross
orders with each other. As there is no market maker, absent a "match" in
prices, a trade would not occur. The closing market price is based on the last
actual trade on the day or from any previous trading session when the last
trade occurred. Thus, there would have to be a match at the prescribed auction
times to "meet" on price and quantity for an execution to occur.
As a listed investment company, the Board operates policies designed to
safeguard the value of shareholders' investment. In particular, the Board may
initiate a buyback programme when the Company's share price represents a
material discount.
Performance
The Company's Net Asset Value ("NAV") was $10.69 per share at 31 December
2025, representing a return of 2.79% for the half year ended then ended. The
Company has provided a total return of 48.79% since issuance. This includes
the costs of the issue resulting in a starting NAV of $9.92 per share compared
with the issue price of $10.00 per share, and initial closing market price of
$10.15 per share.
Expansion of Operating Investment Activities
In November 2024, the Company acquired an affiliated UK investment manager,
Gabelli Securities International UK Limited ("GSIL UK"), a limited company
organised and existing under the laws of England and Wales. GSIL UK is a
regulated investment manager, positioning GMP to increase sources of income,
allowing for both self-management and the broadening of services to affiliated
and third parties.
Dividend History
Since its listing, the Company has paid dividends of $3.15 per Ordinary Share,
totalling $29.4 million.
Fiscal Year 2025 2024 2023 2022 2021 2020 2019 2018
Dividends per share $ 0.28 $ 0.48 $ 0.12 $ 0.48 $ 0.48 $ 0.48 $ 0.48 $ 0.35
Total dividends paid (millions) $ 1.9 $ 3.3 $ 0.8 $ 4.9 $ 4.9 $ 5.0 $ 5.0 $ 3.6
* Subsequent to 31 December 2025, the Company approved an interim dividend of
$0.10 per ordinary share with ex-date 12 March and payment date 27 March. This
dividend was the 26th dividend made since listing and demonstrates the
Company's ongoing commitment to distributing value to shareholders in the form
of cash.
The Company expects to make future dividend payments based upon profits,
subject to continuous review by the Board.
Loyalty Programme
The Company has implemented a Loyalty Programme to incentivise long-term share
ownership. The Loyalty Programme is open to all shareholders who are entered
in the Loyalty Register, a separate register to allow a shareholder to
increase its voting power after holding shares for a continuous period of at
least five years. Each shareholder so registered will be entitled to subscribe
for one Special Voting Loyalty Share in respect of each Ordinary Share held.
These shares can also be used as a form of consideration when entering into
one or more agreements to acquire operating businesses in accordance with the
Investment Policy. As of 31 December 2025, Associated Capital Group, Inc. is
subscribed for 6,179,100 Special Voting Loyalty Shares, the maximum amount it
was permitted under the Loyalty Programme.
Outlook
The bull market in U.S. stocks continued to broaden during the fourth quarter.
Market participation improved in the 4(th) quarter of 2025, with more than 80%
of S&P 500 stocks closing the year above their 200-day moving averages, up
from 60% entering the quarter. Value stocks modestly outperformed growth, and
sector leadership shifted to Healthcare, Financials, and Transports in the
U.S. Internationally, most developed-market stock indices recorded low-to-mid
single digit returns in the fourth quarter leading to full-year performance
which, for the first time since 2022, exceeded the U.S. market.
The continued resiliency shown by the global economy has led various industry
participants to expand their businesses, even seeking transformational deals.
A fairly benign credit environment has also been supportive of M&A.
However, several macro factors, including a lengthy U.S. government shutdown
and geopolitical tensions, continued to weigh on market sentiment. As the new
year develops, it is expected that impact of last year's tax bill and tariff
dynamics will allow strong M&A activity to continue well into 2026.
In the current environment, it is strategically advantageous to allocate a
portion of the Company's assets to U.S. Treasury bills due to the numerous
benefits they offer. Treasuries stand out for their ability to provide
competitive returns when compared to other fixed-income securities and given
their short-term nature allows for frequent reinvestment at prevailing
interest rates, potentially maximizing the overall yield of the portfolio over
time. Moreover, Treasuries are highly liquid and can be easily bought and sold
without significantly affecting their value. This liquidity not only enhances
the flexibility of the Company's investment strategy but also allows for swift
adjustments in response to changing market conditions.
As 2026 gets underway, markets are adjusting to the reality of an upcoming
transition in Federal Reserve leadership, with Chair Powell's term ending on
May 15, 2026. While there has been public discussion about a more aggressive
policy direction as per the current administration, market pricing continues
to reflect an expectation of continuity. Rather than positioning for a sharp
change in approach, markets appear to expect the next Fed Chair to broadly
follow a similar framework: measured, data-dependent, and cautious in
adjusting policy.
Overall, the outlook suggests an economy that is slowing in an orderly way,
not under stress. Inflation continues to cool, and the labour market is easing
in a manner that looks more like normalization than weakness. If these trends
continue, additional rate cuts are still likely, but they are expected to be
fewer and more spread out than markets once assumed. That backdrop should keep
pressure on front-end yields over time, while longer-term rates are likely to
stay range-bound unless growth slows more meaningfully or inflation falls
faster than expected. With no urgency to adjust policy, the Fed has room to
move carefully, reinforcing a measured easing cycle as the economy finds a
more balanced pace and the bond market looks for clearer direction ahead.
I extend a welcome to all our shareholders for the next phase of the Company's
exciting growth.
Marc Gabelli
John Birch
Co-Chairman
Co-Chairman
5 March 2026
Interim Management Report and Responsibility Statement
We share this Half-Yearly Report to Shareholders, encompassing the period from
July 2025 through December 2025, and note certain developments post calendar
year end. This period included several important updates for the Gabelli
Merchant Partners Plc and its wholly owned subsidiary GSIL UK (the "Group") as
included in the Statement from the Chair, which includes:
· On 14 November 2025 the Group paid the interim dividend in respect of
the financial year ended 30 June 2025 of $0.10 per ordinary share.
· On 5 March 2026 the Board declared the first interim dividend for the
financial year ended 30 June 2026 of $0.10 per ordinary share. The dividend
will be paid on 27 March 2026 to shareholders of record on 13 March 2026.
· Although the Group no longer meets the requirements of Section 1158
of the Corporation Tax Act 2010 to be an investment trust, it continues to
conduct its affairs as an investment company.
On behalf of the Board of Directors, we thank investors for entrusting a
portion of their assets with Gabelli Merchant Partners Plc. We appreciate your
confidence in the Gabelli long-term oriented investment method.
The Portfolio Manager's Review provides details of the important events that
have occurred during the period and their impact on the financial statements.
Company Considerations
Investors should note the difference between book and accounting value.
Deferred tax assets ("DTA") can be used to offset certain taxes as applicable
in the United Kingdom. And as such, based on a continuing level of activity
the DTA are expected to be utilised over the near future resulting in the
company not paying UK tax for this year.
As a result of Associated Capital Group, Inc.'s ownership of 92.7% of shares
in issue, the Company is a consolidated subsidiary for Associated Capital
Group, Inc.'s financial reporting purposes. As such, activities of the Group
and of Associated Capital Group, Inc. could be deemed related parties for
purposes of this disclosure.
Investors should note that as a close company with Associated Capital Group,
Inc. controlling greater than 90% of shares that Associated Capital Group,
Inc. may be able to ensure the approval of shareholder resolutions.
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Group fall into the
following broad categories: investment portfolio; global macro events;
operational; market and share price; financial; corporate governance and
regulatory compliance; taxation; emerging and geopolitical risks. The global
macro event category includes specific market and operational risks associated
with the geopolitical conflicts, which continue to cause uncertainty and
disruption across global economies and markets. Information on each of these
identified risk areas, including mitigating actions taken by the Group, was
provided in the Strategic Report in the Group's Annual Report and Accounts for
the year ended 30 June 2025.
The Directors together with the Manager will continue to monitor business
continuity and resilience processes with the objective of mitigating any
potential impacts arising from various ongoing geopolitical conflicts.
Related Party Disclosure and Transactions
During the period, other than fees payable by the Group in the ordinary course
of business, there have been no material transactions with related parties
which have materially affected the financial position or the performance of
the Group.
Going Concern
The Board have closely monitored the impact of the various geopolitical events
as the related continuing uncertainty has short- and potentially medium-term
implications for the Group's investment strategy. Additionally, the Board is
monitoring the period ahead on the basis of the Group not having investment
trust status and its implications on the Group's investment return profile
over the longer term. In context, the Board continuously monitors the Group's
investment portfolio, liquidity and gearing, along with levels of market
activity, to appropriately minimise and mitigate consequential risks to
capital and future income such as geopolitical risks, financial risks etc.
Taking these factors into account, the Directors confirm that they have a
reasonable expectation that the Group will continue to operate and meet its
expenses as they fall due. For these reasons, the Directors consider there is
reasonable evidence to continue to adopt the going concern basis in preparing
the accounts as at 31 December 2025.
Directors' Responsibility Statement
The Directors confirm to the best of their knowledge that:
· the condensed set of financial statements contained within the
Half-Yearly Financial Report has been prepared in accordance with applicable
International Accounting Standard 34 - 'Interim Financial Reporting' (IFS) as
contained in UK-adopted international accounting standards; and
· the Interim Management Report, together with the Portfolio Manager's
Review, include a fair review of the information required by 4.2.7R and 4.2.8R
of the Disclosure Guidance and Transparency Rules.
This Half-Yearly Financial Report has not been audited or reviewed by the
Group's auditors.
The Half-Yearly Financial Report was approved by the Board on 5 March 2026 and
the above responsibility statement was signed on its behalf by the
Co-Chairmen.
Marc
Gabelli
John Birch
Co-Chairman
Co-Chairman
5 March 2026
The Search For Value - Gabelli Merchant Partners Plc
Investment Methodology
Process in Action
Gabelli Funds' approach to the global marketplace is to invest like owners.
Our clients own businesses through the fractional interest of a share. We are
not index benchmarked, and construct portfolios agnostic of market
capitalisation and index weightings. We seek long-term capital appreciation
for our clients relative to inflation over the long term, regardless of market
cycles. We have invested this way since 1977.
The Gabelli Merchant Partners portfolio offers access to companies that have
been identified to have substantial disconnects between market price and our
estimate of the business value (private market value™, or "PMV™") and
where catalyst events exist that may narrow these discounts for the benefit of
GMP shareholders. We thus establish a "Margin of Safety" for our investors by
identifying differences between our estimate of PMV and the stock market
price. The process seeks to identify businesses undergoing some form of
strategic change, typically with strong organic cash flow characteristics,
balance sheets reorganizational opportunities, and strategic operational
flexibility accelerated with the prospect of management capital allocation
actions.
Catalyst merger events can come in many forms including, but not limited to,
corporate restructurings (such as demergers and asset sales), operational
improvements, regulatory or managerial changes, special situations (such as
liquidations), and mergers and acquisitions. Corporate mergers provide
valuable insights into corporate capital allocation decisions and therefore
help in our assessment of long-term valuations. Our proprietary research data
bases track thousands of announced deals globally and utilises that compounded
knowledge in the continued refinement of Private Market Valuations. PMV's will
change over time, and while our analysis is long term, it is through this
consistent process of bottom up stock selection and the implementation of
disciplined portfolio construction that we expect to create value for our
shareholders annually.
In this process, we do sector-by-sector analysis, assessing the PMV of a
business, and identifying the catalyst in place to realise returns. A
company's PMV is not constant, and changes as a function of many variables.
Our analysis emphasises balance sheets, cash flows, and the long‑term
defendable position of a corporation. We achieve returns through investing in
businesses utilising our proprietary Private Market Value with a Catalyst™
methodology. PMV is the value that we believe an informed buyer would be
willing to pay to acquire an entire company in a private transaction. Our team
arrives at a PMV valuation by a rigorous assessment of fundamentals from
publicly available information. Further, PMV's are enhanced through the
analysis of announced corporate mergers and acquisition activity. Mergers
offer tangible insights into the long-term capital allocation decisions of
global corporations. We focus on the balance sheet, earnings, free cash flow,
and the company's management, the stewards of corporate assets, of prospective
companies. The judgement gained from our comprehensive, accumulated knowledge
across a variety of sectors is deployed for investors in a portfolio. Our
analysts typically forecast model company operations 5 years into the future.
Unlike Wall Street's earnings momentum players, we do not try to forecast
earnings with accounting precision and then trade stocks based on quarterly
expectations and realities. We simply try to position ourselves in front of
long-term earnings trends. Throughout our research process, the focus is on
free cash flow: earnings before interest, taxes, depreciation and amortization
("EBITDA") minus the capital expenditures necessary to grow the business. We
believe free cash flow is the best barometer of a business' value.
Deteriorating or rising free cash flow often foreshadows net earnings changes.
We also look at earnings per share trends. In addition, we analyse on and
off-balance sheet assets and liabilities such as property, plant and
equipment, inventories, receivables, and legal, environmental and health care
issues. We want to know everything and anything that will add to, or detract
from, our valuation models. This method of analysis involves looking at
businesses as a function of their assets and earnings power. We examine
businesses as if we were owners of those businesses, and we believe that we
can do that in a rational way by looking at industries on a global basis. Our
investment professionals visit with hundreds of companies each year. Our work
is proprietary, bottom up, and involves the full utilisation of public
resources.
Our analysts follow industries on a global basis and narrow the universe of
potential investment candidates to a short list of the most attractive
companies. All publicly available company material is reviewed, including
annual and quarterly reports, 10‑Ks, 10-Qs, and proxy statements.
Each analyst develops an operational understanding of their industry,
effectively becoming an expert in that industry. The analysts hone this
expertise by continually visiting companies and their senior managements, and
by talking to competitors, suppliers and customers. They also develop and
maintain government and trade sources to derive an overall understanding of
their industry. In addition, our firm hosts a number of industry seminars,
where the top executives of the leading firms share their insights with the
investment community.
The objective of this process is to identify companies that trade at
significant differences to their intrinsic or private market values.
We continually visit the management of hundreds of companies and integrate
their input with our knowledge base. Our goal is to understand management's
motivations and expectations. Given our approach, we want to know who our
partners are and if they are working to enhance shareholder value. This
process, coupled with our financial analysis, helps us select the most
attractive investment candidates for our portfolios.
We employ a three-dimensional approach to valuation:
· Earnings per share
· Free cash flow
· Private market value
The first step is to analyse the income statement and cash flow. Cash flow is
viewed as a barometer of financial health, and often foreshadows earnings
trends. We attempt to forecast the direction and growth rates of the earnings
and cash flow streams.
The second step is to examine the balance sheet. The corporate balance sheet
is recast, assessing real-world values of inventories, property, plant and
equipment and stated book value. To these two analytical processes, dynamic
forecasting and static asset and liability valuation, we add our assessment of
the PMV of the business. In other words, what would this company be worth to
an informed business person attempting to create or purchase a business with
similar characteristics?
Catalyst: Identification of a mispriced situation, however, does not
necessarily guarantee a rewarding investment. The next step is to determine
events in businesses undergoing some form of strategic change that will help
narrow the spread between a stock's public market price and our determination
of its PMV. We call these events catalysts. Catalysts include industry events
such as consolidation, changes in the regulatory or accounting environment,
new technologies, or be indigenous to the company itself such as financial
engineering, demergers, acquisitions or sales.
Results: After we have identified and selected stocks that qualify as
candidates based on these fundamental and conceptual considerations, our
objective is to structure a diversified portfolio. This has been a proven
long-term method for creating wealth, risk adjusted, in the stock market.
Manager History
The Gabelli organisation, of which Gabelli Funds, LLC (the portfolio manager)
is an affiliate, began in the U.S. in 1976 as an institutional value investing
research firm. Mario Gabelli, the firm's founder, is credited by the academic
community for establishing the notion of Private Market Value, the value an
informed industrialist would pay for an entire business in a negotiated
transaction. This is a long-term oriented bottom-up investment process based
on the fundamental investment principles first articulated in 1934 by Graham
and Dodd, the founders of modern security analysis, and further augmented by
Mario Gabelli in 1977 with his introduction of the concepts of PMV into equity
analysis. Gabelli has added the element of a catalyst event to generate
long-term returns. The Gabelli method, PMV with a CatalystTM, is part of the
Value Investing Curriculum at many major business schools and is thus applied
in the analysis of public equity securities by Gabelli Funds for shareholders.
Portfolio Manager's Review
Methodology
The Group will seek to meet a long-term investment objective by utilising the
Gabelli Private Market Value (PMV) with a Catalyst(TM) investment methodology,
investing as owners, with an emphasis on cash generating, franchise companies,
selling at a significant discount to our appraisal of their Private Market
Value and with a Catalyst in place to generate returns. We define Private
Market Value (PMV) as the value an informed industrialist would pay to
purchase assets with similar characteristics in a privately negotiated
transaction. Catalysts are identifiable events, either specific to a
corporation or macro and are utilised to earn returns independent of the broad
markets' direction. Such events include corporate actions such as, but not
limited to, management changes, announced mergers, acquisitions, takeovers,
tender offers, leveraged buyouts, restructurings, demergers and other types of
reorganisations and corporate actions ("deals"). The Company may take both
long and short positions in equity and debt securities. The Company may take
minority or majority controlling operating interests of equity in a business,
and in adverse market conditions may justify a temporary defensive position
and remain in government securities. While taking a long-term view, the
Company may realise opportunities from hedging or for shorter-term gains when
appropriate.
Catalyst driven event arbitrage is a highly specialised investment approach
designed principally to profit from the differential, or "spread," between the
market price of our investments and the value ultimately realised through
event consummation.
We are especially enthusiastic about the opportunities to grow client wealth
in the decades to come, and we highlight below several factors that should
help drive results. These include:
· Increased market volatility, which enhances our ability to establish
positions for the prospect of improved returns
· A robust market for corporate deal making as conditions continue to
provide an accommodative market for mergers and acquisitions
· A normalised interest rate environment, providing attractive merger
spread opportunities
· The Fund's experienced investment team, which pursues opportunities
globally through the disciplined application of Gabelli's investment
methodology
Current Outlook 1 (#_ftn1)
Global deal merger and acquisition activity ("M&A") totalled $4.6 trillion
during 2025, a year over year increase of 49%. This increase was largely
driven by the return of the "mega deal"-those greater than $10 billion-which
totalled $607 billion, an increase of 78% compared to 2024. Deals valued
under $500 million, on the other hand, accounted for $866 billion during the
year, up 6% by value but down 6% in number of deals year over year.
The United States continued to be the most popular venue for transactions.
Deals involving United States-based targets totalled $2.3 trillion during
2025, accounting for 50% of global deal activity. European M&A tallied
$819 billion of transactions over the same period, an increase of 23%. Asia
Pacific target M&A totalled $870 billion-a 47% increase year over year.
Despite tariff concerns, cross-border M&A activity totalled $1.4 trillion
during the year, an increase of 40% year over year. Private equity deals saw
an uptick as well, an increase of 30% compared to the same period last year.
Private equity accounted for 20% of total deal activity. The Technology sector
was the biggest contributor to merger activity during the year, totalling $843
billion, accounting for 18% of total announced deal volume. The Industrial
sector accounted for 15% of deal activity.
Portfolio in Review
U.S. equity markets reached new all-time highs in December, as the S&P 500
returned 17.9% for the full year, bolstered by the passage of the "One Big
Beautiful Bill Act," continued AI infrastructure spending, and a stabilizing
macro environment.
Against this backdrop, global M&A activity in 2025 surged to nearly $4.6
trillion-the second-highest year on record-driven by a massive resurgence in
megadeals. Deals with targets greater than $10 billion more than doubled year
over year, signalling a fundamental shift in boardroom confidence. This robust
environment for corporate consolidation continues to provide a broad
opportunity set. Our approach remains focused on identifying deals that will
close and capturing the associated spreads, which are earned through the
rigorous assessment of merger-specific risks rather than market exposure. By
focusing on the successful navigation of regulatory hurdles and closing
catalysts, we are able to isolate idiosyncratic returns that remain largely
uncorrelated with broader equity indices. This allows us to consistently
recycle capital into the most attractive risk-adjusted spreads within the
current pipeline.
As we enter 2026, the primary headwinds of recent years-restrictive interest
rates and aggressive antitrust enforcement-have fully pivoted into clear
tailwinds. The Federal Reserve concluded 2025 with its third consecutive
25-basis-point rate cut in December, bringing the target range to 3.50%-3.75%.
This easing cycle has lowered the cost of capital for both strategic buyers
and private equity sponsors- the latter seeing a 40% year-over-year increase
in deal volume. On the regulatory front, the transition to a more traditional
antitrust framework has been validated. While the new administration remains
vigilant in specific sectors, the willingness to negotiate remedies and
consent decrees where there are potential issues has significantly mitigated
deal-break risk and provided the regulatory visibility necessary for
large-scale consolidation.
Merger arbitrage spreads remain fundamentally attractive. We have observed a
meaningful decrease in deal terminations and a slight uptick in competing
bids, both of which enhance the risk-adjusted return profile of the strategy.
Even with the Fed's recent easing, the yield environment remains normalized
compared to the prior decade, maintaining a healthy floor for deal spreads
across the risk spectrum.
We continue to find high-conviction investment opportunities in a robust
pipeline. Our focus remains on highly strategic, well-financed transactions
with near-term catalysts. We are upbeat about our ability to generate
consistent absolute returns as we head into 2026.
Notable contributors to performance include:
Media & Entertainment
Paramount Global (PARA-NASDAQ) is a global media, streaming, and entertainment
company. The biggest hurdle was receiving final approval from the Federal
Communications Commission (FCC) in July 2025, which followed a settlement of
outstanding litigation that cleared the path for the change in control. The
transaction closed in August 2025. Under terms of the agreement announced in
July 2024, shareholders of Paramount Global Class A received $23.00 in cash or
1.5333 shares of Class B stock in the new Paramount Skydance, while Class B
shareholders received $15.00 in cash or 1.0 share of the combined company,
valuing the transaction at approximately $30 billion.
Packaged Foods
Kellanova (K-NYSE) operates global snacking, international cereal and noodles,
and North America frozen foods businesses with brands including Pringles,
Cheez-It, Pop-Tarts, and Eggo. The final approval was received from the
European Commission in December 2025, representing the last of 28 required
international regulatory sign-offs and confirming that the combination would
not lead to higher prices for grocery retailers. The transaction closed in
December 2025. Under terms of the agreement announced in August 2024,
shareholders of Kellanova received $83.50 cash per share, which valued the
company at approximately $36 billion.
Specialty Chemicals
Covestro AG (1COV GY-Frankfurt) produces polyurethane and polycarbonate
materials for automotive, construction, and electronics industries.
Performance was driven by the successful navigation of the EU's Foreign
Subsidies Regulation (FSR), which resulted in an in-depth "Phase II"
investigation into the state-backed financing from Abu Dhabi. The deal's
biggest hurdle was cleared in November 2025 when the European Commission
accepted behavioural remedies regarding the removal of an unlimited state
guarantee and licensing of intellectual property. The transaction closed in
December 2025. Under terms of the agreement, shareholders received €62.00
cash per share, which valued the company at approximately €15 billion.
Exploration and Production
Hess Corp. (HES-NYSE) is an energy company that explores and produces crude
oil and natural gas. The largest hurdle for the deal was cleared in July 2025
when a favourable arbitration outcome affirmed that the merger did not trigger
a right of first refusal for partners in the Stabroek Block. The transaction
closed in July 2025. Under terms of the agreement announced in October 2023,
shareholders of Hess received 1.025 shares of Chevron common stock per share,
valuing the company at approximately $53 billion.
Merger investing
Merger arbitrage is a highly specialised component of a portfolio. The
investment approach is designed principally to profit from corporate events,
including the successful completion of proposed mergers, acquisitions,
takeovers, tender offers, leveraged buyouts, restructurings, demergers, and
other types of corporate reorganisations and other actions. As arbitrageurs,
we seek to earn the differential, or "spread," between the market price of our
investments and the value ultimately realised through deal consummation.
Consolidated statement of comprehensive income
(Unaudited) (Audited)
Half year ended Year ended
31 December, 30 June
($000) Notes 2025 2024 2025
Income
Investment income 5 1,115 764 1,489
Total investment income 1,115 764 1,489
Gains on investments
Net realised and unrealised gains on investments 3, 13 2,248 2,239 7,018
Net realised and unrealised currency gains on investments 16 3 -
Net gains on investments 2,264 2,242 7,018
Advisory and distribution
Investment advisory revenue 1,590 453 1,798
Distribution revenue 682 163 740
Other revenue from affiliate 163 45 192
Total advisory and distribution 2,435 661 2,730
Total revenues 5,814 3,667 11,237
Expenses
Portfolio management fee 6 (309 ) (289 ) (585 )
Performance fee 6, 14 - - (1,301 )
Other expenses 6 (2,931 ) (1,295 ) (3,936 )
Total expenses (3,240 ) (1,584 ) (5,822 )
Net return before finance costs and tax 2,574 2,083 5,415
Interest expense and similar charges (1 ) (1 ) (4 )
Profit before taxation 2,573 2,082 5,411
Income tax expense 8 (539 ) (359 ) (1,066 )
Profit for the period 2,034 1,723 4,345
Profit per share (basic and diluted) $ 0.29 $ 0.25 $ 0.63
There were no items related to other comprehensive income for the periods
presented.
The notes on pages 15 to 27 form part of these financial statements.
Consolidated statement of changes in equity
(Unaudited)
For the half year ended 31 December 2025
($000) Notes Called up Share Capital Special Distributable Reserve Retained Reserves Total Equity
Balance as at 1 July 2025 104 42,349 30,262 72,715
Profit for the half year - - 2,034 2,034
Dividends paid 7 - (693 ) - (693 )
Balance as at 31 December 2025 104 41,656 32,296 74,056
(Unaudited)
For the half year ended 31 December 2024
($000) Notes Called up Share Capital Special Distributable Reserve Retained Reserves Total Equity
Balance as at 1 July 2024 103 42,593 25,917 68,613
Ordinary shares created(1) 1 1,003 - 1,004
Profit for the year - - 1,723 1,723
Dividends paid 7 - (1,109 ) - (1,109 )
Balance as at 31 December 2024 104 42,487 27,640 70,231
(Audited)
For the year ended 30 June 2025
($000) Notes Called up Share Capital Special Distributable Reserve Retained Reserves Total Equity
Balance as at 1 July 2024 103 42,593 25,917 68,613
Ordinary shares created(1) 1 1,003 - 1,004
Profit for the year - - 4,345 4,345
Dividends paid 7 - (1,247 ) - (1,247 )
Balance as at 30 June 2025 104 42,349 30,262 72,715
1 Special Distributable Reserve includes $1,003 share premium from the
issuance of shares to effectuate the GSIL UK acquisition.
The notes on pages 15 to 27 form part of these financial statements.
Consolidated statement of financial position
(Unaudited) (Audited)
As at 31 December, As at 30 June
($000) Notes 2025 2024 2025
Non-current assets
Investments held at fair value through profit or loss 3 69,888 61,291 68,117
69,888 61,291 68,117
Current assets
Cash and cash equivalents 10 8,556 7,411 5,092
Receivable for investment sold 320 104 178
Receivables from affiliates 15 778 390 551
Other receivables 15 215 219 168
Deferred tax asset 8 1,264 2,415 1,781
11,133 10,539 7,770
Current liabilities
Portfolio management fee payable (52 ) (49 ) (50 )
Performance fee payable - - (1,301 )
Payables to affiliates 15 (303 ) (310 ) (249 )
Payable for investment purchased (488 ) (205 ) (315 )
Other payables 15 (1,282 ) (802 ) (935 )
Bank overdrafts (4,715 ) (35 ) (54 )
Net current assets 4,293 3,741 4,866
Non-current liabilities
Investments held at fair value through profit or loss 3 (73 ) (146 ) (216 )
Offering fees payable (52 ) (52 ) (52 )
Net assets 74,056 70,231 72,715
Share capital and reserves
Called-up share capital 11 104 104 104
Special distributable reserve 41,656 42,487 42,349
Retained reserves 32,296 27,640 30,262
Total shareholders' funds 74,056 70,231 72,715
The notes on pages 15 to 27 form part of these financial statements.
Gabelli Merchant Partners Plc is registered in England and Wales under Company
Number: 10747219
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Gabelli Merchant Partners Plc (the "Company") is a public limited company
incorporated in the United Kingdom on 28 April 2017. The condensed
consolidated financial statements for the Group comprise the Company and its
subsidiary, Gabelli Securities International UK Limited ("GSIL UK" and
together referred to as the "Group").
The half yearly report has not been audited by the Company's auditors.
2. Accounting policies
(a) Basis of preparation
The financial statements of the Group have been prepared in accordance with
UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The financial statements have been prepared under the historical cost
convention, as modified by the revaluation of financial assets and financial
liabilities (including derivative financial instruments) at fair value through
profit or loss.
The principal accounting policies adopted by the Group are set out below.
Where presentational guidance set out in the Statement of Recommended Practice
('SORP') issued by the Association of Investment Companies ('AIC') in October
2019 is consistent with the requirements of IFRS, the Directors have sought to
prepare the financial statements on a basis compliant with the recommendations
of the SORP.
(b) Basis of consolidation
The Group financial statements consolidate, under IFRS10, the financial
statements of the Company and its wholly owned subsidiary, GSIL UK, drawn up
to the same accounting date.
The Company continues to meet the definition of an investment entity under
IFRS 10 Consolidated Financial Statements. In accordance with IFRS 10.32, the
Company has consolidated GSIL UK, a wholly owned subsidiary whose primary
activity is the provision of investment-related services to third-parties.
While this subsidiary does not itself qualify as an investment entity, the
services it provides are considered significant. As such, the Company has
consolidated GSIL UK in these financial statements from 1 November 2024, being
the date on which the Company obtained control, and will continue to be
consolidated until the date that such control ceases. Control comprises the
power to govern the financial and operating policies of the investee so as to
obtain benefit from its activities and is achieved through direct or indirect
ownership of voting rights. The financial statements of the subsidiary is
prepared for the same reporting year as the Company, using consistent
accounting policies. All inter-company balances and transactions, including
unrealised profits from them, are eliminated in consolidation. All other
investments continue to be measured at fair value through profit or loss, in
line with the requirements for investment entities under IFRS 10.31.
The Company accounted for the acquisition of GSIL UK, an entity under common
control of Associated Capital Group, Inc., under the predecessor accounting
method as the transaction did not meet the definition of a business
combination pursuant to IFRS 3 - Business Combinations and was a transfer of
interests between entities under common control. Furthermore, the Company
applied the prospective presentation method under the predecessor accounting
method. The predecessor accounting method is generally used for group
reorganisations and reflects the continuity of control.
(c) Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business.
(d) Going concern
The Directors confirm that they have a reasonable expectation that the Group
will continue to operate and meet its expenses as they fall due for a period
no less than 12 months from the signing of the balance sheet. The Directors
consider there is reasonable evidence to continue to adopt the going concern
basis in preparing the accounts as at 31 December 2025. In forming this
position, the Directors considered the Group's investment objectives, risk
management policies, capital management policies and procedures, the nature of
the portfolio and expenditure projections in detail.
(e) Statement of estimation uncertainty
In the application of the Group's accounting policies, the Investment Manager
is required to make judgements, estimates, and assumptions about carrying
values of assets and liabilities that are not always readily apparent from
other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant.
Actual results may vary from these estimates. There have been no significant
judgements, estimates, or assumptions for the period.
(f) Income recognition
Revenue from investments (other than special dividends), including taxes
deducted at source, is included in revenue by reference to the date on which
the investment is quoted ex-dividend, or where no ex-dividend date is quoted,
when the Group's right to receive payment is established. Franked investment
income is stated net of the relevant tax credit. Other income includes any
taxes deducted at source. Scrip dividends are treated as unfranked investment
income; any excess in value of the shares received over the amount of the cash
dividend is recognised in the Statement of Comprehensive Income.
Interest income is accounted for on an accrual basis by reference to the
principal outstanding and at the effective interest rate applicable, which is
the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying amount.
(g) Expenses
The management fees are recorded as expense in the Statement of Comprehensive
Income. Interest receivable and payable and management expenses are treated on
an accruals basis. Other expenses are charged to expense on an accrual basis
except where they directly relate to the acquisition or disposal of an
investment, in which case, they are added to the cost of the investment or
deducted from the sale proceeds.
(h) Investments held at fair value through profit or loss
Investments have been designated upon initial recognition at fair value
through profit or loss. Investments are recognised and de-recognised at trade
date where a purchase or sale is under a contract whose terms require delivery
within the time frame established by the market concerned, and are initially
measured at fair value. Subsequent to initial recognition, investments are
valued at fair value. U.S. Treasuries held for investment diversification
purposes are not included as cash equivalents and are valued at their
amortised cost. Movements in the fair value of investments and gains/losses on
the sale of investments are taken to the Statement of Comprehensive Income.
The Company's investments are classified as held at fair value through profit
or loss in accordance with applicable International Financial Standards.
Financial assets and financial liabilities are recognised in the Statement of
Financial Position when the Company becomes a party to the contractual
provisions of the instrument. The Company shall offset financial assets and
financial liabilities if it has a legally enforceable right to set off the
recognised amounts and interests and intends to settle on a net basis.
Financial assets and liabilities are derecognised when the Company settles its
obligations relating to the instrument.
Contracts for Difference (CFDs)
CFDs are recognised in the Statement of Financial Position at the accumulated
unrealised gain or loss as an asset or liability, respectively. This
represents the difference between the nominal book cost and market value of
each position held. Movements in the unrealised gains/losses are taken to the
Statement of Comprehensive Income.
(i) Cash and cash equivalents
The Group may invest part of its net assets in cash and cash equivalents,
money market instruments, bonds, commercial papers or other debt obligations
with banks or other counterparties, having at least a single-A (or equivalent)
credit rating from an internationally recognised rating agency or government
and other public securities, if the Portfolio Manager believes that it would
be in the best interests of the Group and its shareholders. This may be the
case, for example, where the Portfolio Manager believes that adverse market
conditions justify a temporary defensive position. Any cash or surplus assets
may also be temporarily invested in such instruments pending investment in
accordance with the Group's investment policy. Cash balances are translated to
the reporting currency at the prevailing exchange rate as of the valuation
date.
(j) Transaction costs
Transaction costs incurred on the purchase and disposal of investments are
recognised in the Statement of Comprehensive Income.
(k) Foreign currency
Foreign currencies are translated at the rates of exchange ruling on the
period end date. Revenue received/receivable and expenses paid/payable in
foreign currencies are translated at the rates of exchange ruling at the
transaction date.
(l) Fair value
Aside from the Group's investment in GSIL UK which follows the equity method,
all financial assets and liabilities are recognised in the financial
statements at fair value.
(m) Taxation
The tax effect of different items of income/gains and expenditure/losses is
allocated under the marginal method, using the Group's effective rate of tax.
Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the period end date where transactions of
events that result in an obligation to pay more or a right to pay less tax in
future have occurred at the period end date measured on an undiscounted basis
and based on enacted tax rates. This is subject to deferred tax assets only
being recognised if it is considered more likely than not that there will be
suitable profits from which the future reversal of the underlying timing
differences can be deducted. Timing differences are differences arising
between the Group's taxable profits and its results as stated in the accounts
which are capable of reversal in one or more subsequent periods.
At 31 December 2025, after offset against income taxable on receipt, there was
a deferred tax asset ("DTA") of $1.26 million (31 December 2024: $2.42
million, 30 June 2025: $1.78 million) in relation to surplus tax reliefs.
After the loss of its Investment Trust Status it is now possible for the Group
to utilise this DTA in order to shelter capital gains from UK Corporation Tax.
In order for the DTA to remain available, the Group must maintain its
investment business moving forward. The Group's activities are such that it
will have an investment business for UK tax purposes. In particular, the
Investment Trust rules require that "substantially all of the business of the
Investment Trust company consists of investing its funds in shares, land or
other assets with the aim of spreading investment risk and giving members of
the company the benefit of the results of the management of its funds". This
may be considered analogous to having an investment business. Therefore, given
(i) the Group previously received approval from HMRC that this requirement was
met, and (ii) the activity of the company is not intended to change, the Group
will continue having an investment business and will meet the conditions to
carry forward and use its excess management expenses in current and future
periods. As such the Group has included the DTA in the financial statements.
(n) Functional and presentation currency
The functional and presentation currency of the Group is the U.S. dollar.
(o) GSIL UK revenues and expenses
Effective from the date of acquisition on 29 October 2024, GSIL UK revenues
and expenses are included in the Group's Statement of Comprehensive Income.
GSIL UK is contracted by Gabelli Funds, LLC to provide certain investment
advisory and distribution services to an affiliated fund, accordingly Gabelli
Funds, LLC pays GSIL 100% of such revenues from the fund. Distribution
expenses relate to marketing expenses incurred by GSIL UK in performing these
services. Further, GSIL UK has delegated the investment advisory services to
an affiliate of Associated Capital Group, Inc., the cost of these services is
reflected in Advisory revenue paid away to affiliate.
(p) Acquisition of GSIL UK
Under the predecessor method, the assets and liabilities of GSIL UK were
recognised at their existing carrying amounts from the consolidated financial
statements of the former parent, and no goodwill was recognised. The Company's
investment in GSIL UK is subsequently adjusted by the Company's share of GSIL
UK's profit or loss. The Company's investment in GSIL UK is eliminated in the
consolidation of the Group accounts.
3. Investments held at fair value through profit or loss
The financial assets measured at fair value through profit or loss in the
financial statements are grouped into the fair value hierarchy as follows:
As at 31 December 2025 (Unaudited)
Level 1 Level 2 Level 3 Total
$000 $000 $000 $000
Financial assets at fair value through profit or loss
Quoted equities 35,323 - - 35,323
Contingent value rights 221 - - 221
Derivatives - 180 - 180
U.S. Treasuries 34,164 - - 34,164
Gross fair value 69,888
Financial liabilities at fair value through profit or loss
Derivatives - (73 ) - (73 )
Net fair value 69,708 107 - 69,815
As at 31 December 2024 (Unaudited)
Level 1 Level 2 Level 3 Total
$ 000 $ 000 $ 000 $ 000
Financial assets at fair value through profit or loss
Quoted equities 48,542 - - 48,542
Contingent value rights 117 - - 117
Derivatives - 707 - 707
U.S. Treasuries 11,925 - - 11,925
Gross fair value 61,291
Financial liabilities at fair value through profit or loss
Derivatives - (146 ) - (146 )
Net fair value 60,584 561 - 61,145
As at 30 June 2025 (Audited)
Level 1 Level 2 Level 3 Total
$000 $000 $000 $000
Financial assets at fair value through profit or loss
Quoted equities 36,885 - - 36,885
Contingent value rights 114 - - 114
Derivatives - 182 - 182
U.S. Treasuries - 30,936 - 30,936
Gross fair value 68,117
Financial liabilities at fair value through profit or loss
Derivatives - (216 ) - (216 )
Net fair value 36,999 30,902 - 67,901
There were no transfers between levels for all periods presented.
Fair value hierarchy IFRS 13 requires the Group to classify its financial
instruments held at fair value using a hierarchy that reflects the
significance of the inputs used in the valuation methodologies. These are as
follows:
· Level 1 - quoted prices in active markets for identical investments;
· Level 2 - other significant observable inputs (including quoted
prices for similar investments, interest rates, prepayments, credit risk,
etc.); and
· Level 3 - significant unobservable inputs
Analysis of changes in market value and book cost of portfolio investments in
year
(Unaudited) ( ) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 December 2025 31 December 2024 30 June 2025
($000)
Opening book cost 70,401 63,759 63,759
Opening unrealised losses on investments (2,500 ) (6,621 ) (6,621 )
Opening market value 67,901 57,138 57,138
Additions at cost 117,048 72,272 183,051
Disposals proceeds received (117,382 ) (70,504 ) (179,306 )
Gains on investments 2,248 2,239 7,018
Market value of investments 69,815 61,145 67,901
Closing book cost 71,599 65,928 70,401
Closing unrealised losses on investments (1,784 ) (4,783 ) (2,500 )
Closing market value 69,815 61,145 67,901
The Group received $117,382,000 (31 December 2024: $70,504,000, 30 June 2025:
$179,306,000) from investments sold in the year. The book cost of these
investments when they were purchased was $115,850,000 for the Group and
Company (31 December 2024: $70,103,000, 30 June 2025: $172,288,000). Further
explanation of the disposal proceeds received in the period can be found in
the Net realised and unrealised gains on investments section.
Net realised and unrealised gains on investments
(Unaudited) ( ) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 December 2025 31 December 2024 30 June 2025
($000)
Realised gains on investments 1,532 401 2,897
Movement in unrealised gains on investments 716 1,838 4,121
Net realised and unrealised gains on investments 2,248 2,239 7,018
4. Transaction costs
During the year commissions and other expenses were incurred in acquiring or
disposing of investments classified at fair value through profit or loss. The
total costs were as follows:
(Unaudited) ( ) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 December 2025 31 December 2024 30 June 2025
($000)
Purchases 29 38 75
Sales 8 4 25
Total 37 42 100
5. Investment income
(Unaudited) ( ) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 December 2025 31 December 2024 30 June 2025
$000 $000 $000
Income from investments
Overseas equities 144 273 612
Income on short term investments(1) 828 386 728
Other income(2) 143 105 149
Total income 1,115 764 1,489
1 Income on short-term investments represents the return primarily on U.S.
Treasury Bills. Further information can be found in Note 10.
2 Includes swap income of $140,000 for the half year ended 31 December 2025,
$65,000 for the half year ended 31 December 2024 and $73,000 for the full year
ended 30 June 2025, respectively.
6. Expenses
(Unaudited) ( ) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 December 2025 31 December 2024 30 June 2025
$000 $000 $000
Advisory revenue paid away to affiliate(1) (1,590 ) (431 ) (1,776 )
Performance Fee(2) - - (1,301 )
Distribution expense(1) (682 ) (163 ) (740 )
Portfolio Management Fee (309 ) (289 ) (585 )
Contracts for Difference (169 ) (261 ) (509 )
Directors' Remuneration (79 ) (79 ) (158 )
Audit Fees (50 ) (50 ) (110 )
Other (24 ) (56 ) (46 )
Salaries and benefits(1) (63 ) (7 ) (72 )
Transaction costs on derivatives (31 ) (34 ) (66 )
General and administrative(1) (45 ) (14 ) (47 )
Transaction Charges - State Street (27 ) (27 ) (54 )
Company Secretary Fees (25 ) (27 ) (52 )
Legal Fees (25 ) (25 ) (50 )
AIFM Support Services (24 ) (24 ) (48 )
Administration Fees - State Street (23 ) (23 ) (46 )
Custodian/Depositary Fees - State Street (23 ) (23 ) (45 )
Tax Services (13 ) (13 ) (42 )
Printing (9 ) (8 ) (17 )
Registrar - Computershare (7 ) (7 ) (13 )
Regulatory Filing Fees - AIFMD (6 ) (7 ) (13 )
LSE RNS fees (6 ) (6 ) (12 )
Ongoing LSE and UKLA Fees (5 ) (5 ) (10 )
Directors' Expenses (5 ) (5 ) (10 )
Total expenses (3,240 ) (1,584 ) (5,822 )
1 These are expenses of GSIL UK which have been consolidated into the
Company since 1 November 2024. GSIL UK has delegated investment advisory
services to an affiliate of Associated Capital Group, Inc., the cost of these
services rendered to an affiliated merger arbitrage fund is reflected in
Advisory revenue paid away to affiliate. Distribution expenses relate to
marketing expenses paid to third parties incurred by GSIL UK for an affiliated
fund.
2 Refer to Note 14.
Portfolio Management Fee
Under the terms of the Portfolio Management Agreement, the Portfolio Manager
will be entitled to a management fee ("Management Fee"), together with
reimbursement of reasonable expenses incurred by it in the performance of its
duties under the Portfolio Management Agreement, other than the salaries of
its employees and general overhead expenses attributable to the provision of
the services under the Portfolio Management Agreement. The Management Fee
shall be accrued daily and calculated on each Business Day at a rate
equivalent to 0.85% of NAV per annum.
AIFM fees
The Group previously appointed Gabelli Funds, LLC to serve as Alternative
Investment Fund Manager pursuant to the AIFMD. Gabelli Funds, LLC does not
earn a fee for its role as AIFM; it earned $308,682 in portfolio management
fees during the period ended 31 December 2025 (31 December 2024: $289,149, 30
June 2025: $585,385). For the period ended 31 December 2025 Carne provided
certain support services to the AIFM such as due diligence and reporting for
which it earned fees of $24,198.
7. Equity dividends
(Unaudited) ( ) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 December 2025 31 December 2024 30 June 2025
$000 $000 $000
Dividends paid 693 1,109 1,247
During the period ended 31 December 2025 dividends paid per share totalled
$0.10 (31 December 2024: $0.16, 30 June 2025: $0.18 per share).
8. Taxation on ordinary activities
Deferred Tax Assets
At 30 June 2025 total recognised deferred tax assets were $1.78 million.
During the period ended 31 December 2025 the Company incurred deferred tax
expense of $0.52 million reflecting partial utilisation of the deferred tax
asset, resulting in a deferred tax asset of $1.26 million or $0.18 per
Ordinary Share.
The deferred tax asset was comprised of $1,797,966 ($449,491 deferred tax
asset at 25% tax rate) related to unrealised losses on the value of the
investment portfolio and excess expenses of $3,258,036 ($814,509 deferred tax
asset at 25% tax rate) carried forward. This sum, which is net of the amount
set against current period taxable income, arose due to the cumulative
deductible expenses having exceeded taxable income over the life of the
Company. Now that the Company is no longer an investment trust for tax
purposes and is therefore subject to UK capital gains tax, the Company
believes it is more likely than not that it will have sufficient taxable
profits against which these expenses can be offset. Provided the Company
continues to maintain its current investment profile, it is likely that this
deferred tax asset will be utilised to offset future taxable income subject to
the normal corporate tax loss restriction rules for carried forward losses
which restrict their use for any particular period to £5 million plus 50% of
profits in excess of that initial £5 million.
(Unaudited) ( ) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 December 2025 31 December 2024 30 June 2025
$000 $000 $000
Analysis of the charge in the period
Deferred tax expense (517 ) (320 ) (993 )
Irrecoverable overseas tax (22 ) (39 ) (73 )
Total (539 ) (359 ) (1,066 )
Deferred tax expense is due to the partial utilization of the deferred tax in
the offset of current income, resulting in no cash tax due.
9. Earnings per share
Earnings per ordinary share is calculated with reference to the following
amounts:
(Unaudited) ( ) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 December 2025 31 December 2024 30 June 2025
$000 $000 $000
Profit attributable to ordinary shareholders 2,034 1,723 4,345
Weighted average number of shares outstanding 6,927,785 6,859,611 6,859,611
Total return per ordinary share $ 0.29 $ 0.25 $ 0.63
10. Cash and cash equivalents
(Unaudited) ( ) (Unaudited) (Audited)
As at As at As at
31 December 2025 31 December 2024 30 June 2025
($000)
Cash(1) 7,070 6,123 3,880
Cash of consolidated subsidiary 1,058 20 68
Affiliated money market fund(2) 428 1,268 1,144
Total cash and cash equivalents 8,556 7,411 5,092
1 U.S. Treasuries held in the portfolio are not included as cash
equivalents.
2 Affiliated mutual fund is held by GSIL UK.
The Board and Investment Manager oversee investments held in cash and cash
equivalents in accordance with the Investment Policy.
11. Called up share capital
(Unaudited) ( ) (Unaudited) (Audited)
As at As at As at
($000) 31 December 2025 31 December 2024 30 June 2025
Allotted, called up and fully paid:
6,927,785 ordinary shares of $0.01 each 69 69 69
Treasury shares:
3,502,874 ordinary shares of $0.01 each 35 35 35
Total shares 104 104 104
12. Derivatives risk
The Group's investment policy may involve the use of derivatives (including,
without limitation, forward foreign exchange contracts, equity contracts for
difference swap agreements ("CFDs"), securities sold short and/or structured
financial instruments). The Group may use both exchange-traded and
over-the-counter derivatives as part of its investment activity. The cost of
investing whilst utilising derivatives may be higher than investing in the
securities alone (whether directly or through nominees) as the Group will have
to bear the additional costs of purchasing and holding such derivatives, which
could have a material adverse effect on the Group's returns. The low initial
margin deposits normally required to establish a position in such instruments
permit a high degree of leverage. As a result, depending on the type of
instrument, a relatively small movement in the price of a contract may result
in a profit or a loss which is high in proportion to the amount of funds
actually placed as initial margin and may result in unquantifiable further
losses exceeding any margin deposited. In addition, daily limits on price
fluctuations and speculative position limits on exchanges may prevent prompt
liquidation of positions resulting in potentially greater losses.
The use of derivatives may expose the Group to a higher degree of risk. These
risks may include credit risk with regard to counterparties with whom the
Group trades, the risk of settlement default, lack of liquidity of the
derivative, imperfect tracking between the change in value of the derivative
and the change in value of the underlying asset that the Group is seeking to
track and greater transaction costs than investing in the underlying assets
directly. Additional risks associated with investing in derivatives may
include a counterparty breaching its obligations to provide collateral, or,
due to operational issues (such as time gaps between the calculation of risk
exposure to a counterparty's provision of additional collateral or
substitutions of collateral or the sale of collateral in the event of a
default by a counterparty), there may be instances where credit exposure to
its counterparty under a derivative contract is not fully collateralised. The
use of derivatives may also expose the Group to legal risk, which is the risk
of loss due to the unexpected application of a law or regulation, or because a
court declares a contract not legally enforceable.
The use of CFDs is a highly specialised activity that involves investment
techniques and risks different from those associated with ordinary portfolio
security transactions. In a CFD, a set of future cash flows is exchanged
between two counterparties. One of these cash flow streams will typically be
based on a reference interest rate combined with the performance of a notional
value of shares of a stock. The other will be based on the performance of the
shares of a stock. Depending on the general state of short-term interest rates
and the returns on the Group's portfolio securities at the time a CFD
transaction reaches its scheduled termination date, there is a risk that the
Group will not be able to obtain a replacement transaction or that terms of
the replacement will not be as favourable as on the expiring transaction. At
31 December 2025 the Group held CFDs, as shown in the following table:
As at 31 December 2025
Unrealised
Trade Shares gain/(loss)
Security name currency (000) $000
Allfunds Group plc EUR 3 1
American Axle & MFG Holdings GBP 45 2
Bakkavor Group plc GBP 57 8
Bavarian Nordic A/S DKK 4 1
Biocryst Pharmaceuticals Inc USD 17 (4)
Ceconomy AG EUR 43 1
Charter Communications Inc USD 3 (7)
Coeur Mining Inc USD 33 5
Compass Inc USD 8 1
Deutsche Boerse AG EUR * **
Digital Value Spa EUR 6 2
Dongfeng Motor Group Co Ltd HKD 38 **
Dowlais Group plc GBP 625 10
Egetis Therapeutics AB SEK 132 3
Empiric Student Property plc GBP 104 5
Eurogroup Laminations Spa EUR 12 1
Fifth Third Bancorp USD 4 6
Fox Corp USD 8 (15)
Genkyotex SA EUR 7 **
Global Interconnection Group EUR 17 (9)
Greencore Group plc GBP 35 (7)
Grifols SA USD 7 **
Hang Seng Bank Ltd HKD 2 **
Insignia Financial Ltd AUD 94 **
As at 31 December 2025
Unrealised
Trade Shares gain/(loss)
Security name (continued) currency (000) $000
International Personal Finance GBP 32 5
Iveco Group NV EUR 67 3
Jde Peet'S NV EUR 15 3
JTC plc GBP 26 2
Just Group plc GBP 260 2
Kimberly-Clark Corp USD 3 5
Live Nation Entertainment Inc USD 2 1
Mayne Pharma Group Ltd AUD 27 (1)
Metro AG EUR 11 2
National Storage REIT AUD 128 (5)
Nilfisk Holding A/S DKK 8 **
Palo Alto Networks Inc USD 6 47
Pinewood Technologies Group GBP 23 (2)
Primary Health Properties GBP 197 10
PRS REIT plc GBP 151 **
Rayonier Inc USD 5 1
Rpmglobal Holdings Ltd AUD 59 1
Saipem Spa EUR 153 (13)
Santos Ltd USD 26 (2)
Seven + I Holdings Co Ltd JPY 2 2
Solgold plc GBP 407 **
Spear Investment WT EUR 39 **
Subsea 7 SA EUR 23 14
Toyota Industries Corp JPY 6 4
Treatt plc GBP 25 (1)
TT Electronics plc GBP 10 (2)
Ubisoft Entertainment EUR 4 1
Union Pacific Corp USD 3 27
Unite Group plc GBP 9 (5)
Uwm Holdings Corp USD 9 4
Vici Properties Inc USD 1 **
Total unrealised gain on derivatives 107
* Fewer than 500 shares.
** Less than $500.
13. Leverage
Leverage is the ratio between a fund's Total Exposure and its Net Asset Value,
expressed as a percentage. For the purposes of the AIFM Directive, leverage
can be calculated using two methods: (i) the gross method; and (ii) the
commitment method. Under the gross method, Total Exposure is the algebraic sum
of all investment positions (long and short), excluding cash and cash
equivalents and converting derivative instruments into the equivalent position
in the underlying asset. Under the commitment method, Total Exposure is the
algebraic sum of all investment positions (long and short), plus cash and cash
equivalents, minus hedging arrangements and offsetting instruments between
eligible assets.
The Group's leverage levels at 31 December 2025 are shown below:
Gross Commitment
Leverage exposure method method
Maximum permitted limit 500 % 250 %
Actual 105 % 120 %
The leverage limits are set by the AIFM and approved by the Board and are in
line with the maximum leverage levels permitted in the Group's Articles of
Association. The AIFM is also required to comply with the gearing parameters
set by the Board in relation to borrowings.
14. Performance fee - Group and Company
Subject to the satisfaction of the Performance Conditions, the Portfolio
Manager shall be entitled under the Portfolio Management Agreement, in respect
of each Performance Period, to receive 20% of the Total Return relating to
such Performance Period, provided that such amount shall not exceed 3% of the
Average NAV.
Performance Conditions
The Portfolio Manager's entitlement to a Performance fee in respect of any
Performance Period shall be conditional on the Closing NAV per Share in
respect of the Performance Period (adjusted for any changes to the NAV per
Share through dividend payments, Share repurchases (howsoever effected) and
Share issuances since Admission) being in excess of the Performance Hurdle and
High Water Mark. The Performance Hurdle is equal to the Starting NAV per Share
increased by two times the rate of return on 13 week Treasury Bills published
by the US Department of the Treasury over the Performance Period, less the
Starting NAV per Share; multiplied by the weighted average of the number of
Shares in issue (excluding any Shares held in treasury) at the end of each day
during the Performance Period. For the period ended 31 December 2025, no
Performance fee was to be paid. As at 31 December 2025, no amount was
outstanding to the Portfolio Manager in respect of the performance fee,
reflecting the performance period matching the Group's financial year (31
December 2024: $nil, 30 June 2025: $1,300,582).
15. Other assets and liabilities
The categories of other receivables and other payables include:
(Unaudited) ( ) (Unaudited) (Audited)
As at As at As at
($000) 31 December 2025 31 December 2024 30 June 2025
Other receivables
FX currency sold 3 - -
Receivables from affiliates 778 390 551
All other receivables(1) 212 219 168
Total other receivables 993 609 719
Other payables
FX currency sold - - 12
Custodian fees 25 28 36
Accounting fees 31 37 32
Audit fees 50 74 123
Payables to affiliates 303 310 249
Commissions payable 760 321 397
All other payables 416 342 335
Total other payables 1,585 1,112 1,184
1 As at 31 December 2025, 31 December 2024 and 30 June 2025, all other
receivables included prepaid expenses and dividend and swap income.
16. Related party disclosure - Group and Company
Directors
Each of the Directors is entitled to receive a fee from the Group at such rate
as may be determined in accordance with the Articles of Incorporation. The
Directors' remuneration is $30,000 per annum for each Director, other than:
· the Co-Chairmen, who will receive an additional $1,000 per annum(1) ;
· the Chairman of the Audit & Risk Committee, who will receive an
additional $5,000 per annum; and
· the Members of the Audit & Risk Committee, who will receive an
additional $1,000 per annum.
Each of the Directors is also entitled to be paid all reasonable expenses
properly incurred by them in connection with the performance of their duties.
These expenses will include those associated with attending general meetings,
Board or committee meetings and legal fees. The Board may determine that
additional remuneration may be paid, from time to time, to any one or more
Directors in the event such Director or Directors are requested by the Board
to perform extra or special services on behalf of the Group.
1 Mr. Gabelli has waived his fees since appointment as Chairman in his current
role as Co-Chairman.
Other
The Portfolio management fee for the period ended 31 December 2025 paid by the
Group to the Portfolio Manager is presented in the Statement of Comprehensive
Income. Details of the Portfolio Management fee paid during the period is
disclosed in Note 6. Details of Performance fee paid during the year are
disclosed in Note 14.
As at 31 December 2025, Associated Capital Group, Inc., an affiliate of the
AIFM and Portfolio Manager, held 6,421,249 Ordinary Shares in the Group.
Associated Capital Group, Inc. also held 6,179,100 Special Voting Loyalty
Shares, which increased its voting interest. For the half years ended 31
December 2025 and 2024 and the full year ended 30 June 2025, the Group paid
dividends of $0.6 million, $1.0 million and $1.1 million, respectively, to
Associated Capital Group, Inc. commensurate with its ownership interest.
Investors should note that as a close company with Associated Capital Group,
Inc. controlling greater than 90% of shares, Associated Capital Group, Inc.
may be able to ensure the approval of shareholder resolutions.
GSIL UK advisory and distribution revenues are earned from a fund affiliated
with Gabelli Funds, LLC and Associated Capital Group, Inc. Further, GSIL UK
delegates certain investment advisory services to an affiliate of Associated
Capital Group, Inc. as disclosed in Note 6.
Connected party transactions
All connected party transactions are carried out at arm's length. There were
no such transactions during the year ended 31 December 2025.
17. Contingent liabilities and commitments
As at 31 December 2025, the Group had no contingent liabilities or commitments
(31 December 2024: nil; 30 June 2025: nil).
18. Post balance sheet events
On 5 March 2026, the Group declared an interim dividend for the fiscal year
ended 30 June 2026 of $0.10 per ordinary share, payable on 27 March 2026 to
holders of ordinary shares on the register at the close of business on 13
March 2026.
19. Portfolio/schedule of investments
A statement of changes in the composition of the Portfolio during the
financial period is available to shareholders free of charge from the
Administrator on request.
Group Information
Registered Name
Gabelli Merchant Partners Plc
Legal & Financial Advisers to the Group
Registered Office Dickson Minto W.S.
3 St. James's Place, 16 Charlotte Square
London SW1A 1NP Edinburgh
EH2 4DF
Board of Directors
Marc Gabelli Skadden, Arps, Slate, Meagher & Flom (UK) LLP
Marco M. Bianconi 22 Bishopsgate
John Birch London
John Newlands EC2N 4BQ
Yuji Sugimoto
James Wedderburn
Portfolio Manager and The Group is a member of The Association of Investment Companies ("AIC"),
which publishes a number of useful fact sheets and email updates for investors
Alternative Investment Fund Manager interested in investment companies.
Gabelli Funds, LLC
One Corporate Center www.theaic.co.uk
Rye, NY 10580-1422
United States
Company Secretary Information to Shareholders
Bridgehouse Company Secretaries Limited Contact Information and Website
Suite 2:06,
Bridge House, Please visit us on the Internet. Our homepage at www.gabelli.co.uk includes
useful information about the Group, such as daily prices, factsheets,
181 Queen Victoria Street, announcements, and current and historic half year and annual reports.
London, EC4V 4EG
Independent Auditors
PricewaterhouseCoopers LLP We welcome your comments and questions at +44 (0) 20 3206 2100 or via e-mail
at info@gabelli.co.uk.
7 More London Riverside
London SE1 2RT
Administrator and Custodian General Information
State Street Bank and Trust Company SEDOL/ISIN: BD8P074/GB00BD8P0741
20 Churchill Place London Stock Exchange (TIDM) Code: GMP
Canary Wharf Legal Entity Identifier (LEI): 5493006X09N8HK0V1U37
London E14 5HJ
Depositary The Group's registrar is Computershare Investor Services PLC. Computershare's
website address is investorcentre.co.uk and certain details relating to your
State Street Trustees Ltd holding can be checked through this website. Alternatively, Computershare can
be contacted on 0370 707 1390.
20 Churchill Place
Canary Wharf
London E14 5HJ
Registrar and Receiving Agent
Computershare Investor Services Plc Change of name or address must be notified through the website or sent to The
Pavilions, Bridgwater Road, Bristol BS99 6ZZ.
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
1 (#_ftnref1) Thomson Reuters M&A Review - Full Year 2025
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