Gartmore Growth proposes tender offer

The Gartmore Growth Opportunities investment trust has today announced a tender offer, as Citywire suggested it might last month.

When Citywire reported on news of a 40% tender offer from Gartmore Irish Growth almost exactly this time last month we speculated it could set a precedent for the £125 million Gartmore Growth Opportunities (GGO). Highly respected fund manager Gervais Williams runs both.

To be fair it was not hard to see some kind of corporate action ahead, although the investment trust industry can often hold off for a long time when it does not want to take action.

Gartmore Growth Opportunities has a vote on the redemption of its loan stock scheduled for the end of the year and a wind up vote in June 2005. Its biggest shareholder, trustbuster Laxey Partners with 17%, could have used these events to instigate corporate action. The tender proposed today should head off a showdown.

In addition, less aggressive activist shareholder Advance UK investment trust holds a 6.2% stake, which could have added to the pressure felt by the board to deal with the issue.

Gartmore Growth Opportunities is also one of the trusts to feature on broker CloseWins' list of likely potential corporate activity for 2004, which has proved extremely predictive so far this year.

Gartmore Growth Opportunities proposes a tender offer for 50% of its shares at about a 7% discount to its mid price. The company also plans to offer an early redemption on its loan stock.

Shareholders will vote on the proposal on 6 April and if the tender gets the thumbs up the trust's June 2005 wind-up vote will be pushed back five years to 2009.

Williams told Citywire he has already used the markets' recent strength to liquidate about 10% of the portfolio and he is hopeful it will prove to be a very low cost tender.

When Gartmore Irish announced its tender offer there was not much to gain by taking up the offer because of the narrow discount the shares traded at to net asset value, the trust's specialist mandate and the solid prospects going forward.