Questioning the wise choice of investing in Hansa Investment Company?
In a significant move, UK-listed Ocean Wilsons (LSE: OCN) and Hansa, the Brazilian port services and logistics group turned investment trust, have agreed to merge, creating a single trust with assets of £900 million. The merger, which was approved by shareholders last week, is being implemented by the issue of both voting and non-voting shares.
The complex history of Hansa, dating back thirty-eight years after Walter Salomon's death, has now been untangled by his son, William. The business, which was originally operating tug boats in Brazilian ports, was turned into Wilson Sons and floated on the São Paulo market in 2007. However, the web of corporate cross-holdings between various investment trusts and trading companies held no hidden pot of value.
Hansa is controlled by the same family trusts through majority ownership of the voting shares, which comprise a third of the total share capital. Ocean Wilsons, on the other hand, is controlled by Hansa Investment Company (LSE: HAN) and private trusts associated with the Salomon family. Notably, Ocean Wilsons retained a majority holding in Wilson Sons until last October, when it sold its stake, leaving it with a large pile of cash and a portfolio of investments.
The merged trust will continue to be controlled by the Salomons. The annual charge for Hansa is being reduced to around 0.75% as a result of the merger. Hansa's portfolio, managed day-to-day by Alec Letchfield who joined from HSBC in 2013, is similar to Ocean Wilsons', with greater private equity. However, only 10% of Hansa's portfolio is in direct equities and less than 1% is in private equity, while 10% is in "diversifying funds" and 53% is in "core and thematic funds".
The merger is expected to be a bargain for investors, as Hansa's shares currently trade at a discount of 40% to net asset value (NAV). This discount is set to rise above 40% after the merger due to Ocean Wilsons trading at a near 40% discount. The discount is considered a bargain and is expected to decline with time.
In recent years, Hansa has significantly outperformed RIT Capital Partners, especially over three years, largely due to its much lower exposure to private equity. Over the past year, Hansa has returned 8.5%, 35% over three, and 63% over five. The merged trust aims to protect against bear markets via a multi-asset approach.
Despite its complicated history, Hansa's performance record is a match for some of the most renowned investment trusts, including RIT, Ruffer, Capital Gearing, and Personal Assets. The merger between Hansa and Ocean Wilsons marks a new chapter for this investment trust, promising a more diversified portfolio and potentially higher returns for investors.
Read also:
- Shaping India's Economic Progression: Readying the Financial System for Tomorrow
- Conflict between Ben & Jerry's co-founder and Unilever over Gaza issues leads to resignation of co-founder
- Two farmers in Zambia take legal action against two firms with Chinese connections, alleging an ecological disaster caused by their operations.
- Deepening EU-India relations despite apprehensions regarding Moscow connections
