Investment trust Impax Environmental Markets (IEM) will offer investors a 100% cash exit by way of a ‘Continuation Tender Offer’. The offer will be pitched close to NAV (net asset value) which as of 15 January was around 440p/share with debt at book cost.
That compares with yesterday’s share price of 407p, which represented a discount of 7.5% to NAV. Following today’s announcement, the shares have added 17p or roughly 4% to 424p.
| Share Price: 424p (+4.2%) | NAV/Share: 440p |
| Market cap: £807m | -7.5%Discount: |
‘NO CHOICE’
The board said it had ‘no choice’ but to propose the tender offer after pressure from US activist Saba Capital. It added it couldn’t stand by ‘while Saba’s actions create an environment of uncertainty and risk for all our shareholders’.
Saba holds a 20.7% stake in IEM and the offer is conditional on it tendering all its shares. If it doesn’t, the board will propose a second offer for 100% so shareholders with ‘a short-term investment horizon’ can exit.
A general meeting will be called to approve a special resolution, requiring 75% of votes in support, including Saba. If Saba blocks the resolution, ‘its motive for control will be revealed’ says the board.
This is a high-stakes game, and the board is calling Saba out with the continuation tender offer. If all Saba wants is to close the valuation gap, per its ‘Mind The Gap’ campaign, then it should cash in its holding.
The board is concerned about the trust’s ability to meet its mandate if it ends up in a protracted conflict with Saba. Minority shareholders should also be concerned, and with the tender offer they can express support for the board or otherwise.
IEM went down the well-trodden route of buying back shares to narrow the discount to NAV, without success. Over the course of 2025 it bought 49.5 million shares or 20.6% of its share capital for £189 million.
That brought the discount in from 11.4% to 7.4%, according to data from Trustnet. However, it was still above the five-year average of 4% and light years from the premium the trust enjoyed in 2021.
IEM’s parent Impax Asset Management (IPX) recently revealed a drop in assets due to net outflows from institutions. In general, investors seem much less enthused by environmental strategies than they once did.
Read the press release here: https://www.iemplc.co.uk/
Disclaimer: This content is for information only and is not investment advice. Always do your own research before investing. Click here to see full disclaimer.
