Bluehone plans merger to reduce costs

Bluehone Investors plans to merge its £12m Aim VCT 1 into its £30m Aim VCT 2, in a bid to reduce administrative costs.

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The investment manager will put the proposals to shareholders at the funds’ extraordinary general meetings on 15 July, with a view to merge the funds a week later.

Robert Mitchell, partner at Bluehone Investors, said he believed shareholders would welcome the move. "The funds have similar mandates and a large percentage of crossholdings," he said.

"Shareholders will look on this as a chance to reduce the cost of their investment."

Mr Mitchell said 68.9 per cent of the portfolio holdings in the proposed enlarged company would be common between the two portfolios.

"The holdings are similar and the shareholders are also quite similar. Lots of IFAs bought VCT 1 and then also decide to buy VCT 2."

Mr Mitchell added merging the portfolios with differing maturity levels would not cause a problem, but instead increase diversification.

The proposals would give the enlarged company greater flexibility to invest and also conduct share buybacks, he claimed.

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