Barings Emerging EMEA Opportunities Plc - Circular re continuation vote and update on the future strategy of the Company
PR Newswire
LONDON, United Kingdom, October 02
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Baring Emerging EMEA Opportunities PLC (the "Company")
Continuation Vote, update on the future strategy of the Company and publication of a circular
Introduction
Following a period of consultation with Shareholders holding a significant proportion of the Company's issued share capital, the Company today announces proposals for the continuation and future strategy of the Company (the "Proposals"). The Proposals are intended to offer Shareholders protections in relation to the performance of the Company and the discount to NAV at which the Shares trade, along with an enhanced investment proposition.
The Board considers it important that Shareholders should have the opportunity to partake in the decision regarding the future of the Company. Hence, the Board is offering Shareholders the opportunity to vote on the continuation of the Company as it is presently constituted (the "Continuation Resolution").
Subject to Shareholders approving the continuation of the Company, it is intended to continue the Company as it is presently constituted without making a tender offer, which would materially reduce the size of the Company.
The Company has today published a circular (the "Circular") which contains further detail on the Proposals and a notice of general meeting (the "General Meeting"). Shareholder approval will be sought for the continuation of the Company at the General Meeting. The General Meeting will be held at 2.30 p.m. on 21 October 2025 at 20 Old Bailey, London EC4M 7BF.
Background to, and reasons for, the Proposals
In October 2020, the Company announced proposals for the future of the Company, which were approved by Shareholders at a general meeting. Those proposals included changes to the Company's investment policy to broaden the geographic scope of the Company's portfolio, as well as a change to its name and the management fee.
The 2020 proposals also set out a tender offer trigger mechanism (the "Tender Offer Trigger Mechanism"). Pursuant to this mechanism, Shareholders would be given the opportunity of selling some of their Shares in a tender offer for up to 25 per cent. of the Company's issued share capital if either:
(a) the average daily discount of the Company's market share capital to its net asset value ('cum-income') exceeded 12 per cent. as calculated with reference to the trading of the Company's Shares for the period between 1 October 2020 and 30 September 2025 (the "Calculation Period"), (the "Discount Trigger"); or
(b) the performance of the Company's net asset value on a total return basis did not exceed the return of the Company's benchmark by an average of 50 basis points per annum over the Calculation Period (the "Performance Trigger").
Since the beginning of the Calculation Period on 1 October 2020, the Company has performed well. The Company has outperformed its benchmark, the MSCI Emerging Markets EMEA Index (the "Benchmark"), by 1.4 per cent annualised (unaudited). Particularly strong performance was delivered over the last two years. However, Russia's invasion of Ukraine and the resultant sanctions have had a material impact on the Company. Russian assets represented approximately 17.6 per cent. of the Company's net assets as at 25 February 2022. The implementation of sanctions on that date necessitated writing down the Company's Russian assets to zero. After these events, the Company's Shares traded at a wider discount relative to NAV. Over the Calculation Period, the average daily discount of the Shares was 16.8 per cent.
Therefore, whilst the Company's performance has been strong and has exceeded the target set by the Performance Trigger, the average discount has exceeded the 12 per cent. target and so the Discount Trigger has been met.
The Board is of the opinion that a tender offer of up to 25 per cent. at this time would not be in the best interests of the Company or Shareholders. If taken up, such tender would significantly reduce the size of the Company and the liquidity of the Shares, and would increase the Company's cost ratios beyond what the Board considers to be an acceptable level. These factors taken together would reduce the ongoing viability of the Company to such an extent that continuation of the Company in its current structure post a tender offer of up to 25 per cent. would be challenging.
As stated in the Company's annual report for the year ended 30 September 2024 (the "Annual Report"), the Board have therefore been considering alternative proposals for the future direction of the Company. The Board has had discussions with its advisers and Shareholders holding a significant proportion of the Company's issued share capital. As a result, the Board is today offering Shareholders the opportunity to vote on the continuation of the Company as it is presently constituted.
In connection with this review, the Board, together with its advisors, have also been considering the future strategy of the Company should the Continuation Resolution be passed. The aim is to enhance Shareholder value and narrow the discount at which the Shares are currently trading. Following this review, the Board are pleased to announce an enhanced discount control mechanism and dividend policy, and updates to the Company's investment strategy. Further details of these are set out below.
Introduction of a 100% Conditional Tender Offer and Annual Continuation Votes
Following a period of consultation with Shareholders holding a significant proportion of the Company's issued share capital and after discussion with the Company's advisors, the Board is of the opinion that a tender offer at this time would not be in the best interests of the Company or Shareholders given the impact a tender offer for up to 25 per cent. would have on the future viability of the Company. However, the Board considers it important that Shareholders should have the opportunity to partake in the decision regarding the future of the Company. Hence, the proposal of the Continuation Resolution.
The Board is aware of Shareholders' interests in narrowing the discount and maximising future returns. Accordingly, if the Continuation Resolution is passed, the Board will implement strategic measures with the intention of achieving these results.
In addition, if the Continuation Resolution is passed, the Board will implement a revised tender offer trigger mechanism. Under the revised mechanism, Shareholders will be offered a tender offer for 100 per cent. of the Company's issued share capital if the performance of the Company's NAV does not exceed the return of the Benchmark for the period between 1 October 2025 and 30 September 2028 (the "Revised Performance Trigger"). Alongside this, the Board will provide Shareholders with the opportunity to vote on the continuation of the Company annually, at each annual general meeting of the Company, from the annual general meeting in respect of the year ending 30 September 2026, expected to be held in January 2027.
In the event the Continuation Resolution is not passed, the Directors shall draw up proposals for the future of the Company, which may include proposals for the voluntary liquidation, restructuring or reorganisation of the Company.
Shareholders should be aware that, in light of the sanctions related to the ongoing war between Russia and Ukraine, it is unlikely that the Company will be able to realise any of its remaining Russian assets or repatriate income accruing on any sanctioned accounts in the short term. Accordingly, any liquidation of the Company, including as part of a scheme of reconstruction, would likely mean giving up the future possibility of realising any value from the Company's remaining Russian assets which are currently valued at zero (noting that Russian assets represented approximately 17.6 per cent. of the Company's net assets as at 25 February 2022).
Share Buybacks
The Company does not have in place a formal discount control mechanism; instead, the Board effects Share buybacks opportunistically where it considers this is in the interests of Shareholders, and would be effective in enhancing Shareholder value. As noted above, following Russia's invasion of Ukraine and the subsequent sanctions, the Company's Shares traded at a wider discount relative to NAV. Against this backdrop, the Board did not consider buybacks an effective way of delivering value to Shareholders. However, noting the steady improvement of the performance of the Company and the relative value of the Shares, the Board now believes that buybacks, going forward, may provide a useful tool in seeking to maintain a narrower discount, on average, than occurred over the last five years.
At the Company's 2025 annual general meeting, a special resolution was passed by Shareholders granting the Company authority to buy back a total of 1,768,355 Shares representing approximately 14.99 per cent. of the then issued share capital (excluding Shares held in treasury). As at 30 September 2025, (being the latest practicable date prior to the publication of this document), the Company has bought back 74,681 Shares pursuant to this authority. The Company therefore has ample remaining authority to enact a more active buyback programme.
Shares will only be bought back when the Directors believe it is in the interests of Shareholders as a whole and when this offers sufficient value to Shareholders.
Dividend Policy
The Company currently aims to generate an attractive income for Shareholders and has the ability to pay up to 1 per cent. per annum of NAV from capital to Shareholders. Noting the recent strong performance of the Company's portfolio, the Board has, subject to the passing of the Continuation Resolution, committed to a new progressive dividend policy with the intention of paying an increased dividend each financial year, with effect from the year ended September 2025. It is expected that this dividend will be paid from a combination of both income and capital and the Board will not be bound by the previous policy of only paying up to 1 per cent. per annum of NAV from capital each year.
The Directors consider that the new dividend policy should have the dual effect of enhancing the Company's appeal to future investors, in particular retail shareholders, whilst increasing value returned to existing Shareholders.
There is no change to the Company's investment policy as a result of the revised dividend policy, and the Company will continue to focus on capital growth.
Investment Strategy
The Board is pleased with the recent strong performance of the Company and in particular the outperformance of the Company against the Benchmark over the Calculation Period.
The Board, together with the Investment Manager, has been assessing ways to build on this recent strong performance, and deliver competitive returns to Shareholders. The Board and the Investment Manager recognise that the existing investment strategy has proved successful. The Investment Manager intends to make greater use of the capacity afforded within the Company's investment policy, to increase the concentration of the portfolio to up to around 35 holdings. At 30 September 2025, the Company's investment portfolio was made up of 49 holdings. The Investment Manager believes that reducing the number of investments within the Company's portfolio to up to around 35 holdings will effectively balance the benefits of increased alpha generation, whilst not introducing excessive risk into the portfolio. The Board and the Investment Manager are of the opinion that the current environment and market outlook continues to favour a high-conviction approach.
To coincide with this approach, the Investment Manager also intends to reintroduce gearing (as permitted within the Company's investment policy) into the portfolio, through the use of index futures. Exposure to index futures will complement the core investment strategy of generating long-term alpha through stock-picking by enhancing total returns based on the Investment Manager's views on likely broader movements of the markets in the geographic scope of the Company's investment policy. The decision to use futures as a means of gearing has been taken as futures afford greater flexibility for short term application, and are currently attractively low-cost as compared to borrowing. Any use of gearing will be within the scope of the Company's investment policy. Gearing will only be used when the Investment Manager has a high level of confidence that it would add significant value to the portfolio.
For the avoidance of doubt, no changes are being made to the Company's current investment policy or objective as a result of the enhancements set out above.
The Board and the Investment Manager believe that the combination of these two enhancements will allow the Investment Manager to continue to deliver competitive returns for Shareholders.
Benefits of the Proposals
The decision to vote for or against the Continuation Resolution is a matter for each individual Shareholder to decide. However, the Board recommends that Shareholders vote in favour.
In making their decision, Shareholders may wish to consider, among other things, the matters set out below:
- if the Continuation Resolution is not passed, and on the basis that a significant tender offer at this time would not be in the interests of the Company or Shareholders, the Company will put forward proposals to Shareholders for the restructuring, reorganisation or winding up of the Company. Such proposals may mean giving up the future possibility of realising any value from the Company's Russian assets, which are currently valued at zero within the Company's portfolio. Any such proposals would also result in the Company incurring additional costs in formulating those proposals;
- if the Continuation Resolution is passed, the Board will implement an improved dividend policy and enhancements to the Company's investment proposition and also proposes to be more active in the use of Share buybacks with the aim of seeking to maintain a narrower discount, on average, than occurred over the last five years, thereby increasing returns to Shareholders;
- if the Continuation Resolution is passed, the Board will provide Shareholders with the opportunity to vote on the continuation of the Company annually, at each general meeting of the Company, from the annual general meeting in respect of the year ending 30 September 2026, expected to be held in January 2027; and
- if the Continuation Resolution is passed, the Board will implement a revised tender offer trigger mechanism pursuant to which Shareholders will, subject to obtaining Shareholder approval at the time, be provided with a tender offer for 100 per cent. of the Company's issued share capital if the Revised Performance Trigger is activated.
General Meeting
The General Meeting will be held at 20 Old Bailey, London EC4M 7BF at 2.30 p.m. on 21 October 2025, at which Shareholders will be asked to consider and, if thought fit, approve the Continuation Resolution as an ordinary resolution.
To be passed, a simple majority of the votes cast by members entitled to vote and present at the General Meeting in person or by proxy must be cast in favour of the Continuation Resolution.
The full text of the Continuation Resolution is set out in the notice of General Meeting at the end of the Circular.
Recommendation
The Board considers that the approval of the Continuation Resolution is in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Continuation Resolution to be proposed at the General Meeting.
Expected Timetable
Publication of the Circular | 2 October 2025 |
Latest time and date for receipt of proxy appointments | 2.30 p.m. on 17 October 2025 |
General Meeting | 2.30 p.m. on 21 October 2025 |
Results of the General Meeting announced
| 21 October 2025 |
Note: Any defined terms have the same meaning as set out in the Circular. All references to time are to UK time.
Enquiries
Baring Emerging EMEA Opportunities PLC Frances Daley (Chairman) |
Via J.P. Morgan Cazenove |
J.P Morgan Cazenove William Simmonds, Rupert Budge |
+44 (0) 20 3493 8000 |
Quill PR Sarah Gibbons-Cook |
+44 (0)20 7466 5050 |
