REG - Schroder Br.Opps.Tst - Circ re. Proposed Change of Investment Policy

Schroder British Opportunities TrustAnnouncement

29/07/2025 07:02

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RNS Number : 8883S  Schroder British Opportunities Tst.  29 July 2025

29 July 2025

 

Schroder British Opportunities Trust plc

 

("SBO" or the "Company")

 

Proposed Change of Investment Policy and Notice of General Meeting

 

The Board of the Company (the "Board") today announces certain proposals (the
"Proposals") regarding (i) a proposed refocusing of the investment objective
and policy of the Company; and (ii) a proposal to change the Company's
articles of association to bring forward the date on which Shareholders will
be given an opportunity to vote on the Company's continuation from early 2028
to early 2027. Accordingly, a circular will be sent to Shareholders today (the
"Circular") containing further details of the Proposals and convening a
General Meeting at which Shareholders will be asked to consider and, if
thought fit, approve the Proposals.

 

The Circular and Appendix to this announcement contains further detail on the
Proposals.

 

The proposed amendments to the Company's investment policy are deemed to be a
material change to the Company's investment policy, requiring the approval of
shareholders pursuant to 11.4.14(R) of the UK Listing Rules, which will be
obtained if the ordinary resolution to be proposed at the General Meeting
("Resolution 1") is passed.

 

Resolution 1 is important to the Company and the Board regards the refocusing
of the Company's investment policy to be the best strategic option for
Shareholders.

 

Resolution 2 (a special resolution) pertains to proposed changes to the
articles of association to enable the Weighted Voting Provisions (as defined
in the Appendix to this announcement) to apply to the Shareholder resolution
facilitating a managed wind-down process to maximise the realisation of the
Company's assets on a winding-up, if proposed in 2027 in accordance with the
New Articles.

 

The Board recommends that every Shareholder votes in favour of the
Resolutions, as the Directors intend to do in respect of their own holdings.

 

The General Meeting will be held at 1:30 p.m. on 9 September 2025 at 1 London
Wall Place, London, EC2Y 5AU. The Circular will be mailed to shareholders or
otherwise made available today, together with a Form of Proxy.

 

The Circular, together with a document showing all of the proposed changes to
the Existing Articles to form the New Articles, has been published on the
Company's website, www.schroders.com/SBOT (http://www.schroders.com/SBO) is
available to view and download on the Company's website at
www.schroders.com/sbo. Shareholders who require a Form of Proxy should contact
the Company's Registrars at: Equiniti Limited, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA.

 

A copy of the Circular and Notice of General Meeting will be submitted to the
FCA and will be available for inspection from the National Storage Mechanism
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

 

Defined terms used in this announcement shall, unless the context requires
otherwise, have the meanings ascribed to them in the Circular.

 

 

Enquiries:

 

Schroder Investment Management
Limited                              020 7658
6000

Katherine Fyfe (Company Secretarial)

Charlotte Banks
(PR)

 

 

Peel Hunt LLP
(Broker)
              020 7418 8900

Luke Simpson

Liz Yong

Huw Jeremy

 

LEI: 5493003UY8LIHFW6HM02

 

Neither the content of the Company's website (or any other website) nor the
content of any website accessible from hyperlinks on the Company's website (or
any other website) is incorporated into or forms part of this announcement.

 

About Schroder British Opportunities Trust plc 'SBO'

 

SBO invests in a diversified portfolio of UK-focussed public and private
equity companies with long-term growth prospects.

 

Further information on the Company is available at www.schroders.com/sbo

 

 

 

APPENDIX

 

 

Dear Shareholder,

Proposed New Investment Policy and New Articles

1.       Introduction

Further to the Company's announcement dated 17 March 2025, I am writing to you
with details of certain proposals (the "Proposals") regarding (i) a proposed
refocusing of the investment objective and policy of the Company; and (ii) a
proposal to change the Company's articles of association to bring forward the
date on which Shareholders will be given an opportunity to vote on the
Company's continuation from early 2028 to early 2027. As has always been the
Board's intention, Shareholders will be consulted ahead of the 2027 vote being
put to Shareholders and alternative proposals put forward if appropriate. We
are also taking the opportunity to clarify the action to be taken in the event
that Shareholders vote not to continue at that time.

The proposed changes to the articles of association enable the Weighted Voting
Provisions (as defined below) to apply to the Shareholder resolution
facilitating a managed wind-down process to maximise the realisation of the
Company's assets on a winding-up, if proposed in 2027 in accordance with the
New Articles.

The purpose of the Circular is to set out the background to and reasons for
the Proposals and why the Board unanimously recommends that you vote in favour
of the Resolutions to be proposed at the General Meeting to be held at 1:30
p.m. on 9 September 2025, notice of which is set out at the end of the
Circular.

2.       The Proposals

New investment objective and investment policy

Since IPO, the performance of the Company's portfolio has registered a net
asset value ("NAV") total return of 14.9 per cent. 1  (#_ftn1) . The Board
recognises however that, since IPO, much of the positive performance of the
Company's portfolio has come from its minority equity investments in private
companies, which have delivered a return of 1.5x the original investment 2 
(#_ftn2) . Whilst facing difficult market conditions, the Company's public
equity investments have detracted from the overall NAV performance, and it is
the view of both the Investment Manager and the Board that the portion of the
portfolio invested in private companies offers a better opportunity for
shareholder returns in the current environment. As such, and following
discussions with Shareholders, the Board is proposing to change the Company's
investment objective and investment policy such that they are focused entirely
on minority investments in private companies. At the same time as amending the
investment policy to invest entirely in minority investments in private
companies, the Company is also seeking to remove the restriction on the
minimum number of holdings that the Company must have at any one time
(currently described as typically 30-50 holdings). Alongside removing this
restriction, the Company is proposing to limit the proportion of its portfolio
represented by any one investee company to 15 per cent. of NAV at the time of
investment (rather than the existing 10 per cent. limit). Together these
proposed changes are presented in the New Investment Policy below. The Board
considers that the proposed changes will continue to allow the Company to
retain sufficient diversification of risk in the Company's investments.

As this change to the investment policy is material, the Board is seeking
Shareholder approval for it. If the New Investment Policy is approved by
Shareholders, it is expected the Company will be fully deployed in minority
investments in private companies by the end of 2026.

For your reference, the Company's existing investment policy (which includes
its investment objective) is set out in Part 2 of the Circular, together with
a comparison showing the proposed changes.

The Board is proposing that the full text of the New Investment Policy be as
follows:

"Investment Objective

 

The Company's investment objective is to deliver long-term total returns
throughout the life of the Company by investing in a diversified portfolio of
private equity investments in predominantly UK Companies.

 

"UK Companies" means companies which are incorporated, headquartered or have
their principal business activities in the United Kingdom, and companies
headquartered outside the United Kingdom which derive, or are expected to
derive, a significant proportion of their revenues or profits from the United
Kingdom.

 

Investment Policy

 

The Company will invest in a diversified portfolio of private equity
investments consisting predominantly of UK Companies which the Company's
investment manager (the "Investment Manager") believes have strong long-term
growth prospects.

 

"Private equity investments" mean any investments in any of the following
categories (a), (b), (c) and (d) below (although it is envisaged that the
Company will predominantly focus on those of an equity and/or quasi-equity
nature as set out under categories (a) and (b) below):

 

(a) shares in companies and other securities/units/interests equivalent to
shares in companies, partnerships (including limited partnership interests) or
other entities, which, in each case, are not listed or quoted at the time of
investment;

 

(b) securities, derivatives or other instruments giving the right to acquire
or sell any of the shares/securities/units/interests referred to in (a) above,
including without limitation warrants, options, futures, contingent value
rights, convertible bonds, convertible loan notes, convertible loan stocks or
convertible preferred equity;

 

(c) preference shares issued by an issuer referred to in (a) above; and

 

(d) debt-based investments not otherwise covered above, including loan stock,
payment-in-kind instruments and shareholder loans.

 

It is anticipated that the Company's portfolio will typically consist of
companies with an equity value between approximately £50 million and £2
billion at the time of initial investment.

 

Investment restrictions

 

The Company will invest and manage its assets with the object of spreading
risk through the following investment restrictions:

 

·      no more than 15 per cent. of net asset value ("NAV") may be
invested in any investee company;

·      no more than 20 per cent. of NAV may be invested in investee
companies which are not UK Companies;

·      the Company may not take a controlling stake in any investee
company, whether directly or indirectly;

·      the Company may own no more than 20 per cent. of the enterprise
value of any investee company; and

·      the Company will not invest more than 10 per cent. in aggregate
of gross assets in other listed closed-ended investment funds, except that
this restriction shall not apply to investments in listed closed-ended
investment funds which themselves have stated investment policies to invest no
more than 15 per cent. of their gross assets in other listed closed-ended
investment funds. Additionally, in any event, the Company will itself not
invest more than 15 per cent. of its gross assets in other investment
companies or investment trusts which are listed on the Official List of the
Financial Conduct Authority.

 

Each of the above restrictions will be calculated at the time of commitment.
Where the Company makes investments through one or more special purpose
vehicles, owned in whole or in part by the Company or one of its affiliates
(being an affiliate of, or person affiliated with, the Company, including a
person that directly, or indirectly through one or more intermediate holding
companies, controls or is controlled by, or is under common control with, the
Company), the investment restrictions will be applied on a look-through basis.

 

Where the calculation of an investment restriction requires an analysis of
underlying investments held by a fund in which the Company is invested, such
calculation will be based on the information reasonably available to the
Investment Manager at the relevant time.

 

The Company will not be required to dispose of any investment or to rebalance
the portfolio as a result of a change in the respective valuations of its
assets. However, the Investment Manager will regularly monitor the Company's
portfolio and make adjustments from time to time in light of the above
restrictions.

 

Borrowing policy

 

The Company may, from time to time, use borrowings for investment and
efficient portfolio management purposes. Gearing will not exceed 10 per cent.
of NAV, calculated at the time of drawdown of the relevant borrowing, except
that there will be no re-calculation where a facility is renewed, varied or
replaced, and that there will be no re-calculation at the time of a subsequent
drawdown under the same facility, provided that the absolute amount of
borrowing is not increased at the time of any subsequent renewal, variation,
replacement or subsequent drawdown.

 

Hedging and derivatives

 

Derivatives may be used for investment purposes, efficient portfolio
management or for currency hedging purposes, although it is not expected that
a material proportion of the Company's investments will be denominated in
currencies other than pounds sterling and any such currency exposure will not
normally be hedged.

 

Where derivatives are used for investment purposes, the Company does not
intend to increase the Company's gearing in excess of the limits set out in
the borrowing policy above, and any restrictions set out in the investment
policy shall apply equally to exposure through derivatives.

 

Cash management

 

The Company may hold cash on deposit and may invest in cash equivalent
investments, which may include short-term investments in money market type
funds ("Cash and Cash Equivalents").

 

There is no restriction on the amount of Cash and Cash Equivalents that the
Company may hold and there may be times when it is appropriate for the Company
to have a significant cash position instead of being fully or near fully
invested. Cash and Cash Equivalents will be held with approved counterparties
and in line with prudent cash management guidelines agreed between the board
of directors of the Company (the "Board"), the alternative investment fund
manager of the Company (the "AIFM") and the Investment Manager. For the
avoidance of doubt, the restrictions set out above in relation to investing in
listed closed ended investment funds do not apply to money market type funds.

 

Changes to the investment policy

 

No material change will be made to the investment policy without the approval
of the Company's shareholders by ordinary resolution. Non-material changes to
the investment policy may be approved by the Board.

 

In the event of a breach of the investment policy set out above or the
investment and gearing restrictions set out therein, the AIFM shall inform the
Board without delay, and if the Board considers the breach to be material,
notification will be made to a Regulatory Information Service".

2027 Managed Wind-Down Resolution and New Articles

As disclosed in the Company's IPO prospectus, unless alternative proposals are
put forward to and approved by Shareholders at an earlier date, the Existing
Articles require the Board to put forward, at a general meeting of the Company
to be held in the year 2028 but in any event no later than 31 May 2028, a
Resolution requiring the Company be wound up voluntarily (a "Winding-Up
Resolution"). The concept this sought to achieve was to give the Company a
fixed life. The Existing Articles provide that voting on the Winding-Up
Resolution in 2028 will be enhanced such that, provided any single vote is
cast in favour, the Winding-Up Resolution will be passed (the "Weighted Voting
Provisions"). As a result, the Company is regarded as having a fixed life.

Contingent on the adoption of the New Investment Policy, the Board is
proposing to bring forward proposals to allow Shareholders to vote, in the
first quarter of 2027, on the continuation of the Company with the same voting
power as that provided for the 2028 resolution and to amend the process for a
cessation by providing for a managed wind-down process (the "Managed Wind-Down
Resolution"). These proposals will take the form of a Shareholder resolution,
which, if passed, will support the more efficient disposal of assets and
returns of capital to Shareholders. It is proposed that the Managed Wind-Down
Resolution be made subject to the Weighted Voting Provisions which currently
apply only to a Winding Up Resolution in 2028. Following the conclusion of the
managed wind-down process, the necessary resolutions will be proposed in order
to place the Company into voluntary liquidation.

Shareholder consultation

If the New Articles are adopted, ahead of the date on which the Managed
Wind-Down Resolution is to be proposed under the New Articles, the Directors
intend to consult with Shareholders, the Investment Manager and the Company's
financial advisers (having considered the Company's financial position and
prospects at the time), with a view to putting forward to Shareholders
alternative proposal(s) as to the future of the Company.

In the event that no alternative proposals are put forward to Shareholders, or
that any proposals which have been put forward fail to be approved by
Shareholders, a Managed Wind-Down Resolution will be proposed in early 2027 in
accordance with the New Articles, if adopted.

A document showing all of the proposed changes to the Existing Articles to
form the New Articles has been published on the Company's website,
www.schroders.com/SBO. Shareholders should refer specifically to articles
193.1 and 193.2, which contain the only proposed substantive amendments to the
Existing Articles.

Investment Management Agreement amendments

The Company and the Investment Manager have agreed immaterial amendments to
the terms of the performance fee payable to the Investment Manager, as set out
in the Investment Management Agreement. The amendments will not result in any
increase in the amount of performance fee payable to the Investment Manager
from time to time compared to the existing Investment Management Agreement.
The amendments are designed to reflect that, following the redeployment of the
Company's public equity investment assets after the adoption of the New
Investment Policy, the Company's portfolio will no longer contain any public
equity investments. Shareholders should refer to page 42 of the Company's
annual report and accounts for the year ended 31 March 2025, available on the
Company's website at www.schroders.com/SBO, for a description of the
amendments.

3.       Benefits of the Proposals

The Board believes that the Proposals offer the following key benefits to
Shareholders:

·           Positive performance in the Company's portfolio since
IPO has been primarily driven by private equity investments, which have
yielded a return of 1.5 times the original investment. This performance has
resulted in a fair value gain of £20.9 million in the period since inception
in December 2020 up until 31 March 2025.

·           The Company's public equity investments have
encountered difficult market conditions and have detracted from the overall
performance of the portfolio. As such, it is expected that that a portfolio
comprised of minority private equity investments in predominantly UK companies
offers a better opportunity for Shareholder returns in the current
environment.

·           The private equity team has developed a strong pipeline
of opportunities within the UK private investment market and the managers
continue to see interesting deal flow in their core sectors.

·           Bringing forward a Managed Wind-Down Resolution in
early 2027 will allow Shareholders, at the earliest opportunity, to evaluate
the benefits of the New Investment Policy, having allowed the Investment
Manager to redeploy funds from the public equity investments portfolio, and to
determine if the Company should continue in its present form.

4.       Risk factors

Shareholders should be aware of the risk factors set out in Part 3 of the
Circular.

5.       General Meeting

The Proposals are conditional on the approval by Shareholders of the
Resolutions to be proposed at the General Meeting which has been convened for
1:30 p.m. on 9 September 2025.

Resolution 1 (relating to the adoption of the New Investment Policy) will be
proposed as an ordinary resolution. An ordinary resolution requires a simple
majority of votes cast in favour in order for it to be passed.

Resolution 2 (relating to the adoption of the New Articles in order to allow
the application of Weighted Voting Provisions to a Managed Wind-Down
Resolution in early 2027) will be proposed as a special resolution. A special
resolution requires a majority of at least 75 per cent. of votes cast in
favour in order for it to be passed. Resolution 2 is conditional on the
passing of Resolution 1.

Voting at the General Meeting will be by way of a poll. In accordance with the
Existing Articles, all Shareholders present in person or by proxy will upon a
poll have one vote in respect of each Share held. In order to ensure that a
quorum is present at the General Meeting, it is necessary for two Shareholders
entitled to vote to be present, whether in person or by proxy (or, if a
corporation, by a representative).

The formal notice convening the General Meeting is set out in the Circular.

6.       Action to be taken in respect of the General Meeting

Shareholders will find enclosed with this document a personalised Form of
Proxy for use at the General Meeting.

Irrespective of whether you intend to attend the General Meeting in person,
Shareholders are asked to complete and return the Form of Proxy, in accordance
with the instructions printed thereon, to the Company’s Registrar, Equiniti
Limited, at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA so as to
be received as soon as possible, and in any event no later than 1.30p.m. on 5
September 2025. Submission of a Form of Proxy will not preclude Shareholders
from attending and voting in person at the General Meeting.

Recipients of this document who are the beneficial owners of Shares held
through a nominee should follow the instructions provided by their nominee or
their professional adviser if no instructions have been provided.

CREST members who wish to appoint a proxy or proxies through the CREST
electronic proxy appointment service may do so by using the procedures
described in the CREST manual. The CREST manual can be viewed at
www.euroclear.com. A CREST message appointing a proxy (a “CREST proxy
instruction”) regardless of whether it constitutes the appointment of a
proxy or an amendment to the instruction previously given to a previously
appointed proxy must, in order to be valid, be transmitted so as to be
received by the issuer’s agent (ID RA19) by the latest time for receipt of
proxy appointments.

If you are an institutional investor, you may be able to appoint a proxy
electronically via the Proxymity platform, a process which has been agreed by
the Company and approved by the Registrar. For further information regarding
Proxymity, please go to www.proxymity.io. Your proxy must be lodged by
1.30p.m. on 5 September 2025 in order to be considered valid. Before you can
appoint a proxy via this process you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you read these carefully
as you will be bound by them, and they will govern the electronic appointment
of your proxy.

7.       Consequences of the Proposals not being approved

The Board regards the refocusing of the Company's investment policy to be the
best strategic option for Shareholders. However, should Shareholders reject
the proposed New Investment Policy, the Board and the Investment Manager will
continue to fulfil the existing investment objective and policy and work to
identify alternative options for the future of the Company.

In the event that Resolution 1 is passed but Resolution 2 is not passed, then
the Company will have adopted the New Investment Policy but will still be
required under the Existing Articles to propose a Winding-Up Resolution in
2028 (to which the Weighted Voting Provisions will apply and without the
benefit of an orderly managed wind-down). In those circumstances, in order to
avoid unwanted pressure to dispose of private assets in advance of the 2028
Winding-Up Resolution, the Board will consult with Shareholders on how this
should best be addressed.

8.       Documents available for inspection

Copies of the documents listed below may be inspected at the registered office
of the Company at 1 London Wall Place, London EC2Y 5AU during usual business
hours on any weekday (Saturdays, Sundays and UK public holidays excepted), up
to and including the date of the General Meeting and during the General
Meeting:

-                 the Existing Articles, marked to show the
proposed changes;

-                 the New Articles proposed to be adopted at
the General Meeting; and

-                 a copy of the Circular.

9.       Recommendation

The Board considers that the Proposals are in the best interests of the
Company and its Shareholders as a whole.

Accordingly, the Board unanimously recommends that Shareholders vote in favour
of the Resolutions to be proposed at the General Meeting.

The Directors intend to vote in favour, or procure the vote in favour, of the
Resolutions at the General Meeting in respect of their own beneficial
holdings of Shares which, in aggregate, amount to 93,645 Shares representing
approximately 0.13 per cent. of the Company's issued share capital (excluding
Shares held in treasury).

Yours faithfully

Justin Ward

Chairman

 1  Morningstar: 2 December 2020 to 15 July 2025. Private Equity Investments
valued at 31 December 2024.

 2  Realised and unrealised returns.

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