REG - JPMorgan Indian Inv - Result of Company Review

Jpmorgan Indian Investment TrustAnnouncement

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RNS Number : 1037J  JPMorgan Indian Invest Trust PLC  19 May 2025

JPMORGAN INDIAN INVESTMENT TRUST PLC

(the 'Company')

Strategic Update:  Enhanced discount control mechanisms, the introduction of
a dividend distribution policy and investment management fee reduction

 

This announcement contains inside information

Legal Entity Identifier 549300OHW8R1C2WBYK02

 

The Board of JPMorgan Indian Investment Trust plc announces that it has
undertaken a detailed review of options for the future of the Company,
exploring a number of initiatives to help to identify and address the drivers
of underperformance and the persistent discount at which the Company's share
price trades. The Board has concluded that, in the current environment,
shareholders will be best served by the Manager's existing investment strategy
and, following consultation with major shareholders, the introduction of a
package of robust discount control mechanisms, the adoption of an enhanced
dividend distribution policy and a reduction in the investment management fee.

Investment Strategy

As part of the Board's review, constructive discussions were held with the
Company's Manager, JPMorgan Funds Limited ("JPMF"), which reiterated its
commitment to the Company, and confidence in the investment process and
ability to deliver positive relative outperformance in the medium to longer
term.

Since assuming management of the Company's portfolio in September 2022, the
named Portfolio Managers, Amit Mehta and Sandip Patodia, have focused on a
philosophy centred around well-managed businesses with a long-term outlook,
guided by a disciplined valuation framework. Whilst relative performance has
been disappointing, given the portfolio's focus on quality and growth
companies, the underperformance is explained by macroeconomic factors such as
interest rate and inflationary pressures which favoured value orientated
investments. The Board is reassured that as these factors have eased there has
been a recent improvement in relative performance. The material falls in many
stocks over recent months have created a number of interesting investment
opportunities. Many quality growth stocks which the Portfolio Managers
previously viewed as too expensive are now starting to trade at more
acceptable valuations, and they have sought to take advantage of this
situation.

The Board also took comfort from JPMF's ongoing investment in expanding its
proprietary research coverage in India, which now covers 155 Indian companies
/ c.85% of the market; this is expected to grow to c.90% coverage by the end
of 2025.

While the Company's strategy continues to emphasise quality growth companies
and a focus on overall risk and beta of the portfolio, the Portfolio Managers
have also sought to take liquidity risk in the small and mid-cap ("SMID") part
of the market to a greater degree than historically. Utilising the increased
research coverage this has resulted in SMID cap exposure increasing over the
past two years from c.17% to c.23%.

The Board agrees with JPMF's view that India provides a compelling, long-term
investment destination with high-quality companies and management across the
country. India's long term growth prospects remain among the strongest in the
world, thanks to the rapid growth of its middle classes. This growth will
continue to be supported by major structural reforms, including the
government's ongoing commitment to infrastructure development.

This belief closely aligns with JPMF's investment philosophy of investing in
high quality businesses at attractive prices with the ability to compound at
high rates of growth that will deliver both strong absolute returns and
outperformance for the Company and reward patient investors over time.

Discount Control Mechanisms

The Company currently has a performance-related conditional tender offer in
place for up to 25% of the Company's outstanding share capital, at Net Asset
Value ("NAV") less costs, if over the 5 years to 30 September 2025, the
Company's NAV total return in sterling on a cum income basis does not exceed
the total return of the MSCI India Index in sterling terms, plus 0.5% per
annum over the period on a cumulative basis (the "Performance Related
Tender").

While the period over which the performance would be tested has not been
completed, the Board proposes to remove the Performance Related Tender and
immediately adopt the following discount control mechanisms:

·    A tender offer for up to 30% of the Company's outstanding share
capital (excluding shares held in treasury) providing a cash exit at close to
NAV less costs (the "First Tender Offer"). The Board anticipates that the
First Tender Offer will take place in early Q3 2025 and a shareholder circular
will be published in due course.

 

·    Introduce a commitment to target a single digit discount through
active market buybacks, utilising the 14.99% buyback authority approved by
shareholders at the AGM in February 2025.

 

·    Introduce a triennial tender offer for 100% of the Company's
outstanding share capital at a 3% discount to the prevailing NAV (the
"Triennial Tender Offers"). The Board anticipates the first of the Triennial
Tender Offers to be launched in Q2 2028. It is clear from consultation with
shareholders that size and scale of the Company are imperative moving forward.
The Board therefore reserves the right to withdraw the Triennial Tender Offer
if the applications to tender are of a level that the Company would shrink
below a NAV of £150m. In this instance the Board would anticipate putting
resolutions to shareholders to wind up the Company. In addition, the Board
notes that the next continuation vote will be put to shareholders at the
Company's AGM to be held in 2029.

The Board believes that the package of discount control mechanisms with the
immediate First Tender Offer, paired with ongoing market buybacks and sight of
a future liquidity event in the form of the Triennial Tender Offers will help
to significantly reduce the discount. As the performance of the Company
rebuilds, the Board would hope the additional proposals will put the Company
on a pathway to grow once again.

Dividend Policy

The Board proposes to pay dividends each financial year totalling at least 4%
of the net asset value of the Company at the end of the preceding financial
year. Dividends will be paid by way of four equal interim dividends in
December, March, June and September each year. The Board believes that the
introduction of an enhanced distribution policy, which will be financed
through a combination of any available net income in each financial year and
other reserves, utilises the investment structure and will differentiate the
Company amongst its peers, noting that the Company would be the only Indian
Investment Company paying a dividend at this time. The Board is hopeful that
the introduction of the dividend will appeal to a wider investor audience and
is cognisant of the success other JPMF managed investment trusts have had in
attracting additional investor demand for their shares having adopted such an
enhanced dividend distribution policy.

In order to introduce a dividend and distribute out of capital, the Company's
articles will need to be amended. The Board anticipates seeking shareholder
approval to change the Company's articles at the general meeting that will be
convened to approve the First Tender Offer. A circular will be published in
due course.

The First Tender Offer and the subsequent Triennial Tender Offers are
conditional on the adoption of the new enhanced dividend distribution policy
and the shareholder approval for the amendments to the Company's articles, to
allow dividends to be distributed out of capital.

Investment Management Fee

In addition to the initiatives outlined above, the Board is pleased to
announce that the Company's investment management fee arrangements with JPMF
will change.

With effect from 1 October 2025 the annual investment fee will be calculated
as 0.65% on the first £300 million of the lower of the Company's market
capitalisation or net assets and 0.55% in excess of £300 million, instead of
0.75% on the first £300 million and 0.60% in excess of £300 million.

 The Chairman, Jeremy Whitley, commented:

"The Board is pleased to share the outcome from a detailed review of the
Company's future strategy, following a challenging period of underperformance.
Shareholder feedback confirmed the continued need for a large Indian equity
focused investment company, providing exposure to the long-term growth
potential of the Indian market. We therefore believe this comprehensive set of
proposals, coupled with JPMF's additional investment and commitment to the
Company, should help to address the recent performance challenges and the
discount at which the shares trade. This is a turning point for JII and as the
performance rebuilds, we hope to set the Company on a pathway to grow once
again."

 

19th May 2025

 

For further information, please contact:

JPMorgan Funds
Limited

Simon Crinage

Katie Standley

Will Talkington

0207 742 4000

 

JPMorgan Funds Limited (Company
Secretary)

Sachu Saji

0800 20 40 20 (or +44 1268 44 44 70)

 

Deutsche Numis

Hugh Jonathan

Vicki Paine

0207 547 0397

 

 

 

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