Publication of Circular

This announcement and the information contained in it are not for release, publication or distribution, directly or indirectly, in whole or in part, in or into any member state of the European Economic Area, the United States, Australia, Canada, Japan or the Republic of South Africa or any jurisdiction for which the same could be unlawful.

ATLANTIS JAPAN GROWTH FUND LIMITED

(“AJGF” or the “Company”)

(A closed-ended investment company incorporated in Guernsey with registration number 30709)

LEI: 54930041W0LDG00PGL69

Publication of a circular in relation to the recommended proposals for the voluntary winding up of the Company and combination with Nippon Active Value Fund plc

12 September 2023

The Board of Atlantis Japan Growth Fund Limited announces that it has today published a shareholder circular (the "Circular") setting out proposals for the reconstruction and voluntary winding-up of the Company.

Introduction

On 11 August 2023, the Board announced that it had agreed heads of terms with Nippon Active Value Fund plc ("NAVF") in respect of a proposed merger of the Company with NAVF to be effected by way of a scheme of reconstruction pursuant to article 134.3 of the Articles and voluntary winding up of the Company under Section 391(1)(b) of the Companies (Guernsey) Law, 2008, (the "Scheme") and the issue of New NAVF Shares to Shareholders who elect, or are deemed to have elected, to roll over their investments in the Company into NAVF (the "Proposals"). The background and rationale to the Proposals is set out below.

The Proposals, which are conditional upon, amongst other things, the approval of Shareholders at the Extraordinary General Meeting, comprise a voluntary winding up and a scheme of reconstruction of the Company under which Shareholders will be entitled to elect to receive in respect of some or all of their Shares:

a)      New NAVF Shares (the "Rollover Option"); and/or

b)      cash (subject to an overall limit of 25 per cent. of the Ordinary Shares in issue) (the "Cash Option").

The default option under the Scheme is for eligible Shareholders to receive New NAVF Shares meaning that Shareholders who, in respect of all or part of their holding of Shares, do not make a valid Election or who do not make an Election at all under the Scheme will be deemed to have elected for New NAVF Shares in respect of such holding.

In order to effect the Scheme, Shareholder approval is required. Shareholder approval is sought at the Extraordinary General Meeting to approve and authorise the implementation of the Scheme by the Liquidators, once appointed, and place the Company into voluntary winding up. Further details of the Scheme Resolutions to be proposed at the Extraordinary General Meeting are provided below.

The Board considers the Proposals to be in the best interests of Shareholders as a whole and recommends that Shareholders vote in favour of the Resolutions required to implement the Proposals at the Extraordinary General Meeting. 

Background to and Rationale for the Proposal

The Proposals follow an active review by the Board of the options to address the relative small size of the Company, recent poor performance and the discount at which the Ordinary Shares trade to their net asset value. The Board considers that NAVF's strategy of taking advantage of the ongoing reforms and improvements in corporate governance to invest in undervalued Japanese listed companies, particularly cash-rich smaller Japanese companies, where NAVF has performed strongly, and actively engage with them to deliver returns for shareholders, is an attractive strategy. The Proposals provide Shareholders with the opportunity to continue with attractive ongoing exposure to Japanese equities in a larger continuing investment trust structure with improved liquidity, alongside an option to elect for a cash exit, at a modest discount to NAV in respect of at least 25 per cent. of their holdings. The combination, if completed, will be implemented through a scheme of reconstruction under article 134.3 of the Articles and section 391(1)(b) of the Companies (Guernsey) Law, 2008, resulting in the reconstruction and voluntary winding up of the Company.

Subject to the adoption of the New NAVF Investment Policy, NAVF's investment objective is to provide its shareholders with attractive long-term capital growth primarily through the active management of a focused portfolio of quoted companies that have the majority of their operations in, or revenue derived from, Japan, or a majority of whose consolidated net assets are held in Japan, or that are included in the TOPIX, and that have been identified by NAVF's investment adviser, Rising Sun Management Limited ("Rising Sun") as being undervalued.

The Board and its advisers concluded that the Scheme will offer Shareholders the best way to continue their investment in a closed-ended investment vehicle with exposure to the attractive fundamental drivers operating in the Japanese market, but in a vehicle which has delivered top ranking performance and which has a much better rating than the Company whose Ordinary Shares have traded at a persistently wide discount to net asset value historically.  The Proposals also allow Shareholders the opportunity for a partial cash exit at formula asset value ("FAV") (less a 2 per cent. discount to the AJG FAV per Share).  Conditional upon the Scheme becoming effective, the Proposals would result in those assets in the Company which are to be transferred to NAVF pursuant to the Scheme forming part of NAVF's portfolio.

As Shareholders will be aware from the 2022 annual report, the Board announced at the 2019 Annual General Meeting ("AGM") that a continuation vote will be called every fourth year. Accordingly, the next continuation vote is due to be held at the 2023 AGM. As noted in our announcement of 11 August 2023, the Extraordinary General Meeting required to implement the Proposals will be held before the planned AGM, such that (assuming the Proposals are approved at the EGM) the Company will be in liquidation by the date of the planned AGM, and the AGM may therefore be adjourned sine die. If the Proposals are not approved, the AGM will be held as planned and the continuation vote will be voted upon at the AGM. As noted below, if the winding up does not go ahead, the Board will in any case reassess the options available to the Company.

Benefits of the Proposals

The Directors believe that the Proposals will have the following benefits for Shareholders:

a)      NAVF active management - Shareholders may roll their investment in the Company into NAVF, therefore allowing exposure to NAVF’s active management approach. The Board believes that NAVF's approach is differentiated from many of its peers, focuses on unlocking value in cash-rich small and mid-cap Japanese companies and is well aligned with recent developments in Japanese corporate governance and with its structure as a listed UK investment trust. 

b)      Cost contribution - Rising Sun, the investment manager of NAVF, has demonstrated its conviction in the combined fund by offering to underwrite the Company's current estimated costs of the proposed merger up to £800,000 including advisory and termination fees and associated VAT (the "Rising Sun Contribution"). The current estimate of costs associated with the Proposals is approximately £700,000 and therefore it is likely that the Company will not bear any of the costs of the Proposals.

c)       Injection of capital - The Proposals, together with the AJIT Combination, will result in an inflow of capital into NAVF which can be deployed at an advantageous time in the cycle, when recent government reforms support, more than ever in the Board's view, NAVF's strategy of finding undervalued Japanese listed companies and actively engaging with them to deliver improved returns for shareholders.

d)      Increase in scale, spread of costs - The combination with NAVF is expected to improve the enlarged fund's liquidity for all shareholders as well as spreading the fixed costs of NAVF, as the continuing entity, over a larger pool of assets. As at the Latest Practicable Date (being prior to the enlargement of NAVF through the Proposals and the AJIT Combination), the net asset value of the Company was £76.8 million and the net asset value of NAVF was £168.0 million.

e)      Uplift in market value - The Proposals also have the potential to deliver an uplift in the market value of a Shareholder’s investment due to the narrower discount to net asset value at which the NAVF Shares might reasonably be expected to trade over the longer term.

f)        Opportunity for substantial cash exit - The Proposals include a cash exit opportunity of up to 25 per cent. of the Company's Ordinary Shares in issue, providing Shareholders with the ability to realise part (or potentially all) of their investment at a 2 per cent. discount to the AJG FAV per Share, which is at a tighter level than the current discount to net asset value.

g)      Premium segment, main market listing – In connection with (but prior to completion of) the Scheme and the proposed combination of abrdn Japan Investment Trust plc and NAVF ("AJIT Combination"), NAVF is proposing to migrate from the Specialist Fund Segment of the Main Market of the London Stock Exchange to a premium listing on the Main Market of the London Stock Exchange, which is expected to improve the access of retail investors to the enlarged fund and therefore potentially improve its share rating and liquidity. The Scheme is conditional on the Migration but not the AJIT Combination.

NAVF

Shareholders who elect (or are deemed to elect) for the Rollover Option will be electing to receive New NAVF Shares.

NAVF seeks to achieve its investment objective by taking advantage of the corporate governance reforms in Japan and utilising the increased focus on good corporate governance to engage with management teams, unlock value and encourage investee companies to improve returns to their shareholders.

Further details on NAVF and its investment strategy are set out in Part 5 of the Circular and in the NAVF Prospectus published on 1 September 2023.

It is expected that Noel Lamb, currently the Chairman of the Company, will join the NAVF Board on completion of the Scheme.

Conditions of the Proposal

At a general meeting of NAVF to be held on 20 September 2023, the required allotment and disapplication authorities will be sought, as well as NAVF Shareholder approval for a revised investment policy in connection with the Migration.

Implementation of the Proposals is subject to a number of conditions, including:

a)      admission of the existing NAVF Shares to the FCA's Official List and to trading on the Premium Segment of the Main Market pursuant to the Migration;

b)      the recommendation of the boards of the Company and NAVF, to proceed with the Proposals which may be withdrawn at any time (including, without limit, for material adverse change reasons);

c)       the NAVF Share Allotment Authorities relating, inter alia, to the Scheme being approved by NAVF Shareholders and not having been revoked or superseded;

d)      passing of the Resolutions to be proposed at the Extraordinary General Meeting or any adjournment thereof and upon any conditions of such Resolutions being fulfilled; and

e)      admission of the New NAVF Shares to the FCA's Official List and to trading on the Premium Segment of the Main Market of the LSE.

Any condition may, subject to compliance with legal requirements, be waived with the mutual agreement of each of the Company, NAVF and Rising Sun at any time up to completion of the Scheme.

If any condition is not satisfied (or waived), the Proposals will not become effective, the Company will not proceed with the winding-up and instead will continue in existence. Shareholders of the Company will bear any abort costs incurred if the Proposals do not become effective. In these circumstances, the Directors will reassess the options available to the Company at that time.

Cost of Implementing the Scheme

The costs of the Scheme payable by the Company are expected to be approximately £700,000 which, for the purposes of this calculation, is assumed to be irrecoverable where applicable. Rising Sun has agreed to pay the Company's costs of the Scheme up to £800,000, and therefore it is likely that the Company will not bear any of the costs of the Scheme. To the extent that the Company's costs of the Scheme are above £800,000, the Company will bear these costs.

The estimate of the Company’s costs excludes the Liquidators' retention to cover unknown liabilities (estimated at £100,000) and does not take account of any dealing costs which will be incurred by the Company in disposing of assets in order to fund the Cash Option and fund the Liquidation Pool.

Except for these purposes, it is expected that the Company will not liquidate its portfolio but will remain invested in accordance with its published investment policy and will largely transfer its portfolio to NAVF in specie rather than as cash or cash equivalents. This structure has been agreed to protect the investment trust status of the Company, to avoid unnecessary dealing costs in connection with the disposal of the Company's portfolio and to avoid unnecessary periods when Shareholders funds are not invested in the Japanese market in accordance with the Company's investment policy.

Although there are not expected to be any costs incurred in connection with the realignment of the portfolio in respect of the Rollover Pool, there may be dealing costs incurred by NAVF following the completion of the Scheme to the extent that NAVF disposes of the Company's existing portfolio and redeploys into activist opportunities.

In the event that the Scheme does not proceed then each party will bear their own costs in connection with the Proposals.

The Liquidators’ retention is estimated at £100,000 and will be retained by the Liquidators to meet any unknown or unascertained liabilities of the Company. To the extent that some or all of the Liquidators’ retention remains when the Liquidators decide to close the liquidation, this will be returned to Shareholders that were on the Register as at the Record Date.

Entitlements under the Scheme

Under the Scheme, each Shareholder on the Register on the Record Date may elect to receive:

a)      such number of New NAVF Shares as have a value equal to the proportion of the Rollover Pool attributable to the number of Ordinary Shares so elected, for the Rollover Option; or

b)      subject to an overall 25 per cent. cap on such Elections (in aggregate), an amount of cash equal to the Cash Pool NAV per Share multiplied by the number of Ordinary Shares so elected, being the Cash Option.

Shareholders can make different Elections in respect of different parts of their holdings.

The default option under the Scheme is to receive New NAVF Shares, meaning that eligible Shareholders who, in respect of all or part of their holding of Ordinary Shares, do not make a valid Election, or who do not make an Election, will be deemed to have elected for New NAVF Shares in respect of such holding.

After allocating cash and other assets to the Liquidation Pool to meet all known and unknown liabilities of the Company and other contingencies, there shall be appropriated to the Cash Pool and the Rollover Pool the remaining assets of the Company in the manner described in paragraph 3.3 in Part 3 of this document. Such appropriation includes the application of a discount of 2 per cent. to the AJG FAV per Share in relation to those Ordinary Shares in respect of which Shareholders have elected to receive cash. The value arising from the application of the Cash Option Discount shall be allocated to the Rollover Pool for the benefit of Shareholders electing, or deemed to have elected for, the Rollover Option. In the week commencing 16 October 2023, it is expected that the Liquidators shall distribute to Shareholders who have elected for the Cash Option their Cash Entitlements, being rounded down to the nearest penny.

For illustrative purposes only, had the Calculation Date been 5.00 p.m. on the Latest Practicable Date, after deduction of the Dividend and assuming that the maximum amount is elected for the Cash Option, the AJG FAV per Share would have been 189.22 pence and the NAVF FAV per Share would have been 148.24 pence which, for the Rollover Option, would have produced a conversion ratio of 1.28, meaning for every Share held in AJG, 1.28 New NAVF Shares would be issued to Shareholders who elected for the Rollover Option under the Scheme and, in aggregate, 38,987,891 New NAVF Shares would have been issued to Shareholders who elected for the Rollover Option under the Scheme.

The above figures are for illustrative purposes only and do not represent forecasts.  The AJG FAV per Share and NAVF FAV per Share and Shareholders’ entitlements under the Proposals may materially change up to the Calculation Date as a result of, inter alia, changes in the value of investments. 

Scaling back of Elections for the Cash Option

The maximum number of Ordinary Shares (in aggregate) that can be elected for the Cash Option is 25 per cent. of the total number of Ordinary Shares in issue (excluding Ordinary Shares held in treasury) as at the Calculation Date. Each Shareholder who validly elects to receive the Cash Option in respect of up to 25 per cent. of their individual holding of Ordinary Shares as at the Calculation Date, rounded down to the nearest whole share, will receive the full amount of cash for which they have elected (the "Basic Entitlement"). Shareholders are also entitled to elect to receive cash in respect of more than 25 per cent. of their individual holdings of Ordinary Shares (such excess amount being an "Excess Application"). However, if aggregate Elections are made for the Cash Option which exceed 25 per cent. of the issued Ordinary Shares (excluding Ordinary Shares held in treasury) as at the Calculation Date, Shareholders who have made an Election for the Cash Option in excess of their Basic Entitlement will have their Excess Applications scaled back in a manner which is, as near as practicable, pro rata to the number of Ordinary Shares elected under such Excess Applications. Ordinary Shares which are subject to such scaling back will be deemed to have elected for the Rollover Option.

Dividends

The Company has declared a Dividend, in respect of the financial quarter ended 31 July 2023, of 1.96p per Ordinary Share with a record date of 25 August 2023 which will be paid on 29 September 2023.

It is not anticipated that any further dividends will be paid by the Company in relation to the current financial period or for the period up to the liquidation of the Company.

Shareholder Meeting

The implementation of the Proposals will require a general meeting of the Company. The notice convening the Extraordinary General Meeting (to be held at 3.00 p.m. on 10 October 2023) is set out in the Circular.

The Resolutions to be considered at the Extraordinary General Meeting will, if passed, approve the terms of the Scheme and associated amendments to the Company's Articles set out in Part 3 of the Circular, place the Company into liquidation, appoint the Liquidators, agree the basis of their remuneration, authorise the Liquidators to enter into and give effect to the Transfer Agreement with NAVF to renounce New NAVF Shares in favour of Shareholders in accordance with the Scheme and authorise the Liquidators to apply to cancel the listing of the Ordinary Shares with effect from such date as the Liquidators may determine.

Each Resolution to be proposed either as a special resolution or an extraordinary resolution will require at least 75 per cent. of the votes cast in respect of it to be voted in favour, whether in person or by proxy, in order for it to be passed.

If relevant, the Company will notify Shareholders of any changes to the proposed format for the Extraordinary General Meeting as soon as possible via a Regulatory Information Service and its website.

Recommendation and Voting Intentions

The Board considers the Proposals and the Resolutions to be proposed at the Extraordinary General Meeting to be in the best interests of Shareholders as a whole.

Accordingly, the Board unanimously recommends Shareholders to vote in favour of the Resolutions, as the Directors intend to do in respect of their own beneficial holdings, which total 170,000 Ordinary Shares (representing 0.42 per cent. of the Company's total voting rights) as at 11 September 2023. The Directors who hold Ordinary Shares (being Noel Lamb, Philip Ehrmann, Richard Pavry and Michael Moule) intend to roll over their entire beneficial holdings of Ordinary Shares into New NAVF Shares.

Expected Timetable

	2023
Ex dividend date for the Dividend	24 August
Record date for the Dividend	25 August
Dividend paid to Shareholders	29 September
Latest time and date for receipt of Forms of Election and TTE instructions from Shareholders wishing to elect for the Cash Option	1.00 p.m. on 5 October
Calculation Date	5.00 p.m. on 5 October
Record Date for entitlements under the Scheme	6.00 p.m. on 5 October
Latest time and date for receipt of Forms of Proxy and CREST voting instructions from Shareholders for the Extraordinary General Meeting	3.00 p.m. on 6 October
Ordinary Shares disabled in CREST	close of business on 6 October
Trading in Ordinary Shares suspended	7.30 a.m. on 10 October
Extraordinary General Meeting	3.00 p.m. on 10 October
Reclassification of Ordinary Shares	10 October
Appointment of Liquidators	10 October
Effective Date for implementation of the Scheme	10 October
Announcement of the results of Elections, the AJG FAV per Share, the Cash Pool NAV per Share and the NAVF FAV per Share	10 October
CREST accounts credited with, and dealings commence in, New NAVF Shares	8.00 a.m. on 11 October
Certificates despatched in respect of New NAVF Shares during or as soon as practicable after	week commencing 16 October
Cheques despatched to Shareholders who elect for the Cash Option in accordance with their entitlements and CREST accounts credited with cash	week commencing 16 October
Cancellation of listing of Reclassified Shares	as soon as practicable after the Effective Date

Note: All references to time in this document are to UK time. Each of the times and dates in the above expected timetable (other than in relation to the Extraordinary General Meeting) may be extended or brought forward. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service.

A copy of the Circular has been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The Circular will also shortly be available on the Company's website at www.atlantisjapangrowthfund.com where further information on the Company can also be found.

Capitalised terms used but not defined in this announcement will have the same meaning as set out in the Circular dated 12 September 2023.

For further information please contact:

Enquiries:

Company Secretary

Hannah Hayward
Northern Trust International Fund Administration Services (Guernsey) Limited
Email:  [e-mail]
Tel:         [phone]

Corporate Broker

Singer Capital Markets
Robert Peel, Alaina Wong (Investment Banking)
James Waterlow  (Sales)
Tel:       [phone]

Important Information

This announcement contains statements about the Company that are or may be deemed to be forward looking statements. Without limitation, any statements preceded or followed by or that includes the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects" or words or terms of similar substance of the negative thereof, may be forward looking statements.

These forward looking statements are not guarantees of future performance. Such forward looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statement. Due to such uncertainties and risks, readers should not rely on such forward looking statements, which speak only as of the date of this announcement, except as required by applicable law.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of such jurisdictions.

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