Tender Offer

RNS Number : 8860M

Qatar Investment Fund PLC

19 October 2016

 

19 October 2016

Qatar Investment Fund PLC 

("QIF" or the "Company")

Tender Offer to purchase up to 12.0 per cent. of the Company's issued share capital

A circular explaining the terms of a Tender Offer for up to 12.0 per cent. of the issued Share Capital of the Company and a notice of an Extraordinary General Meeting to be held on 17 November 2016 has today been posted to Shareholders (the "Circular").

Capitalised terms and expressions shall have the same meanings as those attributed to them in the Circular.

1.    Introduction

As announced by the Company on 13 April 2015, the Directors resolved to put forward a proposal (subject to the Company's discontinuation resolution at the annual general meeting of the Company in 2015 not being passed by shareholders) to implement a tender offer in the fourth quarter of 2016, being a graduated tender offer of up to 15 per cent. of the Company's issued Share Capital at the Record Date (excluding treasury shares). The final size of the Tender Offer is determined by the average discount to NAV per Share at which the Shares trade in the twelve month period from 8 October 2015 to 6 October 2016, assuming it is in excess of 10 per cent., and capped at 15 per cent. Further details about this graduated tender offer are set out in paragraph 3 of this announcement.

2.    The Company's Performance and Prospects

The Company is a closed-ended investment company which was incorporated in the Isle of Man on 26 June 2007. The investment objective of the Company is to invest primarily in Qatari equities and in listed companies in other GCC countries. 

As at 18 October 2016, being the latest practicable date prior to the publication of the Circular, the unaudited Net Asset Value per Ordinary Share was US$1.2736 and the closing mid-market Share price was US$1.07.

The Company's NAV per Share has declined from US$1.4635 at 8 October 2015 to US$1.2701 at 6 October 2016, which is equal to a decrease of 13.2 per cent. This compares to the 11.9 per cent. decrease in the QE Index over the same period.

During this period, Shareholders received a dividend of 4.0 cents per Share which was paid in January 2016 and the Directors have declared a dividend for the 2016 financial year of 4.0 cents per Share payable in 2017 after completion of the Tender Offer.

According to the Ministry of Development Planning and Statistics, Qatar's GDP increased 1.1 per cent. in Q1 2016 compared to Q1 2015. The non-hydrocarbon sector GDP grew 5.5 per cent., mainly driven by expansion in electricity, construction, transportation and financial services sectors. Lower oil prices meant the hydrocarbon sector GDP declined by 3.0 per cent. The drop in oil prices has negatively impacted Qatar's fiscal balance and the country is expected to report a fiscal deficit for the first time in 15 years, estimated at 4.8 per cent. of GDP, in FY 2016.

Going forward, the Investment Adviser believes that Qatar's real GDP growth is set to continue, driven by strong growth in the non-hydrocarbon sector, as investment spending remains strong. Amid lower oil prices, the Ministry of Development Planning and Statistics expects Qatar to remain the fastest growing economy in the MENA region in 2016 and 2017, growing by 3.9 per cent. and 3.8 per cent., respectively. Underpinned by preparation to host the FIFA 2022 World Cup, the non-hydrocarbon sector expansion is expected to be at around 6.0 per cent., while the hydrocarbon growth is expected to be around 1.4 per cent. in both 2016 and 2017. The Barzan gas project should help raise hydrocarbon output once it is fully operational in 2017.

Qatar's population grew 5.5 per cent. between December 2015 and September 2016, to reach 2.56 million. Population growth is expected to remain strong in coming years, as large project spending related to the 2022 FIFA World Cup continues to attract expatriates. Thus, steady growth in population and high level of personal consumption is expected to continue to encourage the domestic consumer and services sector companies.

3.    The Tender Offer

The Board is aware that the Shares are tightly held and that therefore liquidity in the Shares can, at times, be limited. This Tender Offer is designed to enable those Shareholders (other than Restricted Shareholders) who wish to realise a portion of their holding of Shares to have the opportunity to do so.

As announced by the Company on 13 April 2015, the Directors resolved to put forward a graduated tender offer for up to 15 per cent. of the Company's issued Share Capital at the Record Date (excluding treasury shares). The final size of the Tender Offer is determined by the average discount to NAV per Share at which the Shares trade in the twelve month period from 8 October 2015 to 6 October 2016, assuming it is in excess of 10 per cent. and capped at 15 per cent., as set out in the table below. 

12 month average discount	Tender offer size
Less than 10%	Nil
10.00% -10.99%	10.0%
11.00% -11.99%	11.0%
12.00% -12.99%	12.0%
13.00% - 13.99%	13.0%
14.00% - 14.99%	14.0%
15% or greater	15.0%

The average discount to NAV per Share at which the Shares have traded for the past 12 month period has been 12.3 per cent. (from 8 October 2015 to 6 October 2016), and has therefore exceeded 10 per cent.

Accordingly, the Directors have put forward to Shareholders a tender offer for up to 12.0 per cent. of the Company's issued Share Capital (excluding treasury shares). The total number of Shares to be purchased under the Tender Offer will not exceed 14,045,544 Shares, representing approximately 12.0 per cent. of the Company's issued Share Capital (excluding treasury shares) as at 18 October 2016 (being the latest practicable date prior to the publication of this announcement).

The Tender Price will be an amount equal to a discount of one per cent. to Formula Asset Value as at the Calculation Date, calculated in accordance with paragraph 3 of Part III of the Circular. The Record Date for the Tender Offer is 5.30 p.m. on 25 October 2016.

The Tender Offer will be conditional, inter alia, on the passing of the Resolution to be proposed at the Extraordinary General Meeting and the Company satisfying the distributable profits requirements under Isle of Man law at the time of the Tender Offer.

The Board has proposed the Resolution at the Extraordinary General Meeting which, if passed, will provide the Board with authority to repurchase Shares in order to implement the Tender Offer. All Shares tendered will be cancelled.

Key points of the Tender Offer

The key points of the proposed Tender Offer are as follows:

·     the Tender Offer is for up to 12.0 per cent. of the Company's issued Share Capital (excluding treasury shares) as at the Record Date;

·     Shareholders (other than Restricted Shareholders) on the Register on the Record Date will be able to tender a number of their Shares, up to the maximum of that Shareholder's Basic Entitlement;

·     Shareholders (other than Restricted Shareholders) on the Register on the Record Date will also be entitled to tender additional Shares in excess of their Basic Entitlement;

·     the Tender Price will be the price per Share which represents an amount equal to a discount of one per cent. to Formula Asset Value as at the Calculation Date;

·     continuing Shareholders should receive an uplift to their NAV per Share as the Tender Price is being calculated to a discount of one per cent. to Formula Asset Value (which includes the costs of the Tender Offer (including the costs of associated portfolio realisations));

·     the Tender Price will be paid to Shareholders in US Dollars and will be effected by the despatch of cheques drawn on an account of a branch of a United Kingdom clearing bank, or the crediting of CREST accounts as appropriate; and

·     any Shares tendered will be cancelled.

Conditions of the Tender Offer

The Tender Offer is conditional, inter alia, upon: (i) the Company obtaining the necessary Shareholders' authority to implement the Tender Offer at the Extraordinary General Meeting; (ii) the Company satisfying the distributable profits requirements under Isle of Man law at the time of the Tender Offer; and (iii) the Repurchase Agreement becoming unconditional in all respects (save in respect of any condition relating to the Tender Offer becoming unconditional).

Implementation of the Tender Offer will require approval by Shareholders at the Extraordinary General Meeting, which is to be held at 10.30 a.m. on 17 November 2016. The Tender Offer is also conditional upon Panmure Gordon being satisfied that the Company has sufficient funds available to meet its obligations under the Repurchase Agreement. In addition, the Tender Offer may be postponed or terminated in certain other circumstances as set out in paragraph 2 of Part III of the Circular.

The number of Shares to be acquired by Panmure Gordon under the Tender Offer will not in any event exceed 14,045,544 Shares, representing 12.0 per cent. of the Company's issued Share Capital (excluding any Shares held in treasury by the Company) as at 18 October 2016 (being the latest practicable date prior to the publication of this document).

The Company's authority to repurchase its own Shares, to be proposed at the Company's Annual General Meeting to be held on 17 November 2016 in respect of up to 14.99 per cent. of the Company's issued Share Capital (excluding treasury shares) as at 16 September 2016 (being 17,548,355 Shares) will, if approved by Shareholders at the Annual General Meeting, remain in force and will be unaffected by the Tender Offer.

Options for Shareholders

Shareholders on the Register on the Record Date only can choose:

·     to continue their full investment in the Company; or

·     save for Restricted Shareholders, to tender their Basic Entitlement, plus the option to tender additional Shares which may be purchased if other Shareholders tender less than their Basic Entitlement.

Shareholders (other than Restricted Shareholders) on the Register at the Record Date will be entitled to have up to 12.0 per cent. of their respective holdings purchased under the Tender Offer (and also the option to tender additional Shares which may be purchased if other Shareholders tender less than their Basic Entitlement).

Further details of the Tender Offer

Shareholders (other than Restricted Shareholders) on the Register on the Record Date are invited to tender for sale some of their Shares up to each Shareholder's Basic Entitlement to Panmure Gordon who, as principal, will purchase at the Tender Price the Shares validly tendered (subject to the overall limits of the Tender Offer) and, following the completion of all those purchases, sell the relevant Shares on to the Company at the Tender Price by way of an on-market transaction, in accordance with the terms of the Repurchase Agreement. All transactions will be carried out on the London Stock Exchange.

Shareholders will also have the option to tender additional Shares which may be purchased by Panmure Gordon to the extent that other Shareholders tender less than their Basic Entitlement. Any such excess tenders will be satisfied pro rata in proportion to the amount tendered in excess of the Basic Entitlement (rounded down to the nearest whole number of Shares) or otherwise at the discretion of Panmure Gordon, in consultation with the Board.

The Tender Offer is subject to certain conditions, and may be terminated in certain circumstances as set out in paragraph 2 of Part III of the Circular. Further details of the calculation of the Tender Price are set out in paragraph 3 of Part III of the Circular.

Shareholders' attention is drawn to the letter from Panmure Gordon set out in Part II of the Circular and to Part III of the Circular and, for Shareholders who hold their Shares in certificated form, to the Tender Form which together constitute the terms and conditions of the Tender Offer.

Details of how Shareholders will be able to tender Shares can be found in paragraph 4 of Part III of the Circular.

Shareholders should note that, once tendered, Shares may not be sold, transferred, charged or otherwise disposed of other than in accordance with the Tender Offer.

Shareholders are not obliged to tender any Shares and if they do not wish to participate in the Tender Offer Shareholders should not complete or return their Tender Form.

Shareholders who are in any doubt as to the contents of this document or as to the action to be taken should immediately consult their stockbroker, bank manager, solicitor, accountant or other independent professional adviser authorised under the Financial Services and Markets Act 2000 or from an appropriately qualified independent adviser.

4.    Restricted Shareholders and other Overseas Shareholders

The attention of Restricted Shareholders and Overseas Shareholders is drawn to paragraph 10 of Part III of the Circular. The Tender Offer is not being made to Shareholders who are resident in, or citizens of, Restricted Territories. Restricted Shareholders are being excluded from the Tender Offer to avoid infringing applicable local laws and regulations relating to the implementation of the Tender Offer. Accordingly, copies of this document, the Tender Form and any related documents are not being and must not be mailed or otherwise distributed in or into Restricted Territories.

It is the responsibility of all Overseas Shareholders to satisfy themselves as to the observance of any legal or regulatory requirements in their jurisdiction, including, without limitation, any relevant requirements in relation to the ability of such Overseas Shareholders to participate in the Tender Offer.

5.    General Meeting

The Proposal set out in the Circular is subject to Shareholder approval at the Extraordinary General Meeting that has been convened for 10.30 a.m. on 17 November 2016, to be held at the offices of Galileo Fund Services Limited, Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB. Notice of the Extraordinary General Meeting is set out at the end of the Circular. The Resolution to be proposed is to authorise the Company to make market purchases of its Shares pursuant to the Tender Offer on the terms set out in the Circular.

The Resolution will be proposed as an ordinary resolution which requires, on a show of hands, more than 50 per cent. of Shareholders voting to vote in favour to be passed or, on a poll, votes in favour to be cast by holders of more than 50 per cent. of the Shares which are voted on the Resolution. Under the Articles of Association, two Shareholders entitled to attend and vote on the business to be transacted, each being a Shareholder present in person or a proxy for a Shareholder or a duly authorised representative of a corporation which is a Shareholder, shall constitute a quorum. Every Shareholder present in person or (being a corporation) by representative or by proxy shall, on a show of hands, have one vote and, on a poll, shall have one vote for every Share held by him.

6.    Recommendation

The Board considers that the Proposal is in the best interests of Shareholders as a whole. Accordingly, the Board recommends that Shareholders vote in favour of the Resolution to be proposed at the Extraordinary General Meeting, as those Directors who hold beneficial interests in Shares intend to do in respect of their own beneficial holdings of Shares which, in aggregate, amount to 86,182 Shares representing approximately 0.07 per cent. of the issued Share Capital of the Company (excluding treasury shares) .

The Investment Adviser has indicated its intention to tender its Basic Entitlement of 2,624,205 Shares pursuant to the Tender Offer. Each of Nicholas Wilson and Leonard O'Brien, Directors of the Company, has indicated his intention to tender his Basic Entitlement of 6,000 Shares and 4,341 Shares, respectively, pursuant to the Tender Offer.

The Board makes no recommendation to Shareholders as to whether or not they should tender their Shares. Whether or not Shareholders decide to tender any of their Shares will depend, among other things, on their individual circumstances including their tax position and on their view of the Company's prospects. Shareholders in any doubt as to the action they should take should consult an appropriately qualified independent financial adviser, authorised under the Financial Services and Market Act 2000, without delay.

7.    Expected Timetable of Principal Events

The expected timetable for the Tender Offer is as follows:

Record Date for participation in the Tender Offer	5.30 p.m. on 25 October 2016
Latest time and date for receipt of Tender Forms or for settlement of TTE Instructions in respect of the Tender Offer	1.00 p.m. on 14 November 2016
Latest time and date for receipt of Forms of Proxy in respect of the Extraordinary General Meeting	10.30 a.m. on 15 November 2016
Extraordinary General Meeting	10.30 a.m. on 17 November 2016
Calculation Date	5.30 p.m. on 7 December 2016
Results of the Tender Offer and Tender Price announced	12 December 2016
Settlement date: cheques despatched and CREST accounts credited with proceeds in respect of successfully tendered Shares	19 December 2016
Balancing certificates despatched and CREST accounts credited in respect of unsold Shares	from 19 December 2016

Each of the times and dates in the expected timetable may be extended or brought forward without further notice. 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 provider.

All references to times are to London times.

Capitalised terms and expressions shall have the same meanings as those attributed to them in the Circular.

A copy of the Circular will shortly be available for inspection on the National Storage Mechanism at www.hemscott.com/nsm.do and is available for download from the Company's website www.qatarinvestmentfund.com/publications.

For further information:

Maitland [phone]

William Clutterbuck / Cebuan Bliss

Panmure Gordon [phone]

Richard Gray / Andrew Potts / Atholl Tweedie

Galileo Fund Services Limited [phone]

Ian Dungate

 

END

 

 

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