More interest in Kepit trust

Clifford German
Tuesday 06 August 1996 23:02

The board of Kepit, the embattled investment trust, now has six separate expressions of interest as well as the hostile bid from Henderson Touche Remnant which put it in play last week, a spokesman said yesterday.

A range of possibilities could involve outright bids, as well as new management groups which could restructure the existing portfolio from within, or the conversion of the investment trust into a unit trust. Names in the frame include Schroders, Flemings and Ivory & Sime.

None of the new offers has reached the negotiating stage but further discussions are likely to take place before the deadline of 19 August the Kepit board has set for all serious proposals to be on the table.

Before then Kepit hopes that at least one of the interested parties will suggest paying the existing Kepit shareholders rather than charging them for the privilege of realising their investment, as the initial proposal from HTR envisages. But this is only feasible if the new managers can be guaranteed that a significant number of Kepit investors will agree to remain with the fund.

The Kepit EGM was adjourned sine die after about half an hour yesterday morning, although the warrant-holders will have to meet again at the same time next week because too few attended the first meeting.

Most of the questions at the meeting came from small investors seeking basic information, although some asked why the dividends could not be increased. (Under investment trust rules they are limited to paying out 85 per cent of the fund's income.)

After the meeting Kepit chairman Shane Ross said shareholder expectations for performance from the trust were too high: "The problem was that shareholders had expected a bonanza and that has proved difficult to realise.

"With the benefit of hindsight, 1994 was probably not the best time to launch such a fund," Mr. Ross added.

He said that because of the structure of the fund and the nature of its shareholders, Kepit had always been more vulnerable than rival Mercury European Privatisation Trust. "We have shareholders whose attitude is a bit more aggressive."

Among those is Colin Maclean's Scottish Value Trust, which in May bought a 4 per cent stake for pounds 17m in the Kleinwort trust.

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