Alliance and Witan to join forces in £5bn merger

Alliance Trust and Witan Investment Trust are to join forces, the British firms announced on Wednesday, creating a major new £5bn vehicle.

The investment trusts said the merged firm, to be called Alliance Witan, would likely qualify for inclusion in the FTSE 100.

In a statement, the London-listed firms said Alliance Witan would be a "more liquid, high-profile and cost-efficient one stop shop investment vehicle".

They continued: "With net assets of around £5bn, significant economies of scale, eligibility for FTSE 100 inclusion, powerful and well-established brand recognition on both sides and proven marketing expertise…Alliance Witan will aim to be the UK’s leading global equity investment proposition."

As at 1100 BST, shares in Alliance were up 1% at 1,212.53p while Witan were ahead 3% at 270p.

Under the terms of the deal, Witan’s assets will roll into Alliance in exchange for the issue of new Alliance Witan shares to Witan shareholders.

Alliance Trust’s manager, Willis Towers Watson, will have overall responsibility for managing the combined assets. It will also make a "significant contribution" to help absorb transaction costs.

"Alliance Trust shareholders are not expected to suffer any net asset value dilution from the direct costs of the transactions," the firms noted.

The deal is expected to complete by the start of the fourth quarter of 2024, at the latest.

Russ Mould, investment director at AJ Bell, said: "The investment trust M&A machine has been going into overdrive over the past year or so.

"Investors who want to beat the market often turn to actively-managed investment funds or trusts in the hope they will outperform. Given that these fund managers are collecting an annual fee, one would hope they can do better than the market, but Witan has found it hard to achieve this on a sustainable basis,

"Retirement plans for Witan’s chief executive Andrew Bell prompted a review of the trust, and it was effectively plonked on the market."

Witan announced in March that Bell would be stepping down after 14 years with the business.