BlackRock Smaller Companies Trust has proposed a merger with its stablemate BlackRock Throgmorton Trust that would create a vehicle with net assets of approximately £780 million, the largest growth-focused trust in the UK smaller companies sector.
Shares in BlackRock Smaller Companies Trust rose 4% to 1,433 pence on the news.
The deal would wind up Throgmorton, with its shareholders offered the choice of rolling their investment into the enlarged trust or taking a cash exit at a 1% discount to net asset value, capped at 38% of Throgmorton's issued share capital. BlackRock Smaller Companies Trust shareholders will be offered a parallel tender offer covering up to 28% of its shares on the same terms.
The combined trust would be co-managed by Roland Arnold, who currently leads BlackRock Smaller Companies Trust, and Dan Whitestone, Throgmorton's existing portfolio manager. More than 75% of the two portfolios overlap by value, the company said.
Management fees would be cut under the new structure, with BlackRock charging 0.5% annually on the first £500 million of net assets, falling to 0.45% above £750 million. The company said this would give the enlarged trust the lowest ongoing charges ratio in its peer group at an estimated 0.63%, compared with 0.8% currently for BlackRock Smaller Companies Trust.
BlackRock will waive six months of management fees to cover the costs of the transaction, estimated at around £1.9 million.
Saba Capital Management, the activist investor that holds 10.4% of BlackRock Smaller Companies Trust and 17.8% of Throgmorton, has committed to vote in favour of the proposals and to tender its shares in both trusts.
Shareholders will vote on the proposals at a general meeting on 30 March 2026. The company also plans a five-for-one share split to reduce the share price and improve accessibility for smaller investors.