REG - Utilico Emerging Mkt - Announcement of shareholder-friendly initiatives

Utilico Emerging Markets TrustAnnouncement

07/08/2025 07:00

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RNS Number : 3045U  Utilico Emerging Markets Trust PLC  07 August 2025

7 August 2025

UTILICO EMERGING MARKETS TRUST PLC

(LEI Number: 2138005TJMCWR2394O39)

 

Announcement of shareholder-friendly initiatives

 

Comprehensive suite of key initiatives to enhance value for shareholders, and
underpin an attractive vehicle with a differentiated emerging markets strategy
delivering long-term performance and total returns

 

The Board of Utilico Emerging Markets Trust plc ("UEM" or the "Company") is
pleased to provide the following update. As set out in the annual report for
the year ended 31 March 2025, the Board has been reviewing the effectiveness
of the Company's discretionary tender facility, as well as other potential
options for more proactive discount management. As a result of that review,
the Board announces a comprehensive suite of initiatives to be adopted by UEM
which seeks to increase demand for its shares and enhance the rating of the
Company's shares over time.

 

The proposed initiatives are:

 

·    New conditional tender offer structure: a new performance-related
tender offer benchmarked against the MSCI Emerging Markets Total Return Index
("Benchmark") and measured over a five-year period, for up to 25% of the
Company's issued share capital, equivalent to £126 million of the Company's
net asset value ("NAV") at 31 July 2025;

·    Share buyback commitment: the Board intends to continue using its
buyback programme to seek to address the discount to NAV at which the
Company's shares may trade from time to time, with the ambition of maintaining
a single digit discount in normal market conditions on a sustainable basis. In
the three financial years ended 31 March 2025 the Company has repurchased 28.2
million shares for £62.2 million;

·    Progressive dividend policy: a continuation of the commitment to
increase the total annual dividend, paid quarterly. Having increased the
dividend year on year since 2016, the Company paid an annual dividend of 9.125
pence per share for the year ended 31 March 2025, equating to a distribution
of £17.0 million. The Company is targeting future annual rises; and

·    Advancement of the 2026 continuation vote: it is proposed that the
planned 2026 continuation vote be brought forward to be held on or around the
date of the 2025 Annual General Meeting ("AGM") and at subsequent five-yearly
intervals thereafter, subject to shareholder approval of the necessary
resolutions.

 

Mark Bridgeman, Chairman of UEM, commented: "While UEM's long-term performance
has been impressive and the share price discount at which the Company's shares
have been trading has narrowed significantly over recent months, UEM's 20(th)
anniversary is an opportune time to review certain features of the Company's
structure and distribution policy, to ensure alignment with the current
environment and to help drive increased value for shareholders from their
investment in UEM.

 

"The package of measures we are introducing is intended to enhance shareholder
value and provide greater transparency, whilst also enabling the Investment
Managers and the Board to focus on delivering a strong long-term performance
through our differentiated emerging markets strategy. We thank our investors
for their continued support of the Company and look forward to continuing our
long-term track record of outstanding returns."

 

Charles Jillings & Jacqueline Broers, Joint Portfolio Managers of UEM
added: "For 20 years, UEM has focused on carefully researched, strategically
targeted, bottom-up investing in emerging market infrastructure and utilities
companies which are well placed to benefit from the global infrastructure
megatrends. We continue to remain highly confident of the investment
strategy's potential to continue its 20-year track record of long-term
outperformance."

 

New performance-related tender structure

 

Whilst the Company has had the authority, since its initial public offering in
2005, to operate a potential tender facility for up to 12.5% of the issued
share capital, having reviewed the appropriateness of the facility in light of
the evolution of market practice over the 20-year period, the Board has
determined that a new five-yearly performance-related tender structure be
adopted. This structure, subject to shareholder approval at the relevant time,
would implement an enhanced tender offer for up to 25% of the Company's issued
share capital in the event that the Company underperforms the Benchmark over
the relevant five-year period (the "Tender Offer").

 

Over the five years to 31 March 2025, UEM's NAV total return was 67.2%,
significantly in excess of the Benchmark which was up by 40.8%. The Board has
confidence that NAV returns in excess of the Benchmark will continue. However
if, over the five-year period to 31 March 2030, the Company's NAV total return
fails to exceed the Benchmark, the Board will put forward proposals to
shareholders to implement the tender offer at a price equal to the then
prevailing NAV less 2% and costs associated with the implementation of the
tender offer.

 

Share buyback commitment

 

Since its inception 20 years ago, UEM has believed in the value of its
portfolio and offering, and has bought back its ordinary shares to an
aggregate value of £182.9 million. The Board intends to continue using the
Company's buyback programme to seek to address the discount to NAV at which
the Company's shares may trade from time to time, with the ambition to
maintain a single digit discount in normal market conditions and on a
sustainable basis. As well as assisting in the management of the rating at
which the shares trade, share buybacks are also accretive to NAV per share. In
the three financial years ended 31 March 2025 the Company has repurchased 28.2
million shares for £62.2 million.

 

Progressive dividend policy

 

The Board considers that the current dividend policy provides significant
appeal to investors looking for income as well as capital growth. Since
inception, the Company has paid a total of £258.6 million in dividends to
shareholders.

 

The Board affirms its objective to increase the total annual dividend, to be
paid quarterly by way of interim dividends each year in September, December,
March and June. Accordingly, in the absence of unforeseen circumstances, the
Board will continue its aim to declare a rising dividend each year, utilising
reserves if required. For the financial year ended 31 March 2025, the Company
paid an annual dividend of 9.125 pence per share, equating to a distribution
of £17.0 million.

 

UEM is the only emerging markets trust to have increased annual dividends in
each of the last ten years.

 

Advancement of the 2026 continuation vote

 

In order to align with the proposed five-yearly  performance-related tender
structure, the Board  proposes that, subject to shareholder approval, the
continuation vote which is due to take place in 2026 be brought forward to
2025, and that further continuation votes be proposed at the AGM held every
five years thereafter.

 

The Board believes that aligning the five-yearly continuation vote with the
five-yearly performance-related tender offer provides the most appropriate
basis to manage the portfolio to deliver best performance for the Company's
shareholders, whilst also providing an opportunity for shareholders to tender
shares should the Company underperform the Benchmark.

 

This proposal, which requires an amendment to the Company's Articles, will be
subject to the approval of shareholders by special resolution at a General
Meeting ("GM") to be convened around the time of the 2025 AGM.

 

Portfolio disclosure

 

In alignment with the shareholder-friendly initiatives outlined above, the
Board recently decided to further enhance the Company's transparency in
accordance with best practice by disclosing all of the Company's portfolio
holdings in its report and accounts.

 

Alongside this, the Board and the Investment Managers have agreed that the
Company will not make any new investments which are unlisted (Level 3
investments) except in exceptional circumstances. Whilst the value of these
investments represents a small proportion of the total portfolio (2.7% as at
31 March 2025), given UEM's primary focus has been on listed investments, this
commitment is made in light of certain market sentiment towards funds
containing substantial amounts of unlisted holdings.

 

Attractive long-term track record and outlook

 

UEM recently celebrated its 20(th) anniversary as a public company, following
its admission to trading on the London Stock Exchange on 20 July 2005. Since
inception to 31 July 2025, UEM has achieved a NAV total return of 9.1% per
annum or 470.6% in aggregate, significantly outperforming the MSCI Emerging
Markets Index which was up by 349.7% over that period. UEM's focus on
infrastructure and utilities in emerging markets is highly differentiated from
the MSCI Emerging Markets Index and is expertly managed by a disciplined,
bottom-up approach from the Investment Managers. The defensive nature of
UEM's infrastructure and utilities portfolio, supported by global
infrastructure megatrends and the Investment Managers' disciplined stock
selection, positions UEM to sustain its success over the long term.

 

General Meeting

 

The detailed proposals and resolutions relating to the new initiatives
outlined above and the notice convening the GM will be set out in a
shareholder circular to be published in due course.

 

 

 

 

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

 

Name of contact and telephone number for enquiries

 

 Joint Portfolio Manager and Company Secretary
 ICM Investment Management Limited                                    +44(0)1372 271486
 Charles Jillings / Jacqueline Broers / Alastair Moreton

 Public Relations
 Montfort Communications                                              +44 (0) 7798 626282
 Gay Collins / Alex Everett
 utilico@montfort.london (mailto:utilico@montfort.london)

 Joint Brokers
 Shore Capital                                                        +44(0)20 7408 4050
 Gillian Martin / Daphne Zhang / Matthew Walton - Corporate Advisory

 Fiona Conroy - Corporate Broking

 Barclays Bank                                                        +44(0)20 7623 2323
 Dion Di Miceli / Stuart Muress / James Atkinson
 BarclaysInvestmentCompanies@barclays.com
 (mailto:BarclaysInvestmentCompanies@barclays.com)

 

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