Throgmorton ends 50-year AXA Fram deal for BlackRock

The Throgmorton investment trust has parted company with AXA Framlington after a 51-year association to link up with BlackRock.

The deal, subject to shareholder approval, will see BlackRock managers Mike Prentis, manager of the BlackRock Smaller Companies Trust, and Richard Plackett, head of BlackRock's UK small and mid-cap team, co-manage the trust.

Throgmorton also rejected a merger approach from Gartmore Growth Opportunities.

The Board of Throgmorton says the move follows an "extensive review of its options going forward", which it carried out at the beginning of the year. Some commentators have also pointed to the performance of Framlington, which dipped last year, as a contributing factor.

Management of the trust was handed to Chris St John in February this year, following Roger Whiteoak’s departure from AXA Framlington.

It is believed Merrill Lynch-backed BlackRock's hedge fund expertise will allow the £265m Throgmorton trust to go short on small company stocks, many of which have struggled since market turbulence began last summer.

Throgmorton has used Framlington's services since its formation in 1957.

AXA Framlington has yet to comment on the move but says it will make an announcement shortly.

Richard Bernays, chairman of Throgmorton, says BlackRock's track record in the small companies sector was instrumental in its decision to appoint it.

"Having carefully considered the options available, we believe these proposals from BlackRock give shareholders the opportunity to benefit from the very best of current fund management practice," he says.

“BlackRock has an excellent record in the smaller companies sector. Using contracts for difference is an innovative approach to managing assets of a UK investment trust and is appealing in maximising returns for shareholders through the market cycle. The tender offer enables investors to sell a significant portion of their holding should they choose to.

"And the adoption of a proven discount protection mechanism will, we believe, deliver superior shareholder value in the years to come.”

The Board has decided to implement a tender offer for up to 40% of the Trust’s outstanding issued share capital. It adds the directors will continue to consider repurchasing shares in the market if they believe it to be in shareholders' interests and as a means of correcting any imbalance between supply of and demand for the shares.