UK markets close in 2 minutes
  • FTSE 100

    +67.42 (+0.97%)
  • FTSE 250

    -1.96 (-0.01%)
  • AIM

    -3.25 (-0.26%)

    +0.0033 (+0.28%)

    -0.0048 (-0.34%)

    -525.56 (-1.31%)
  • CMC Crypto 200

    -57.14 (-3.65%)
  • S&P 500

    -49.46 (-1.19%)
  • DOW

    -301.63 (-0.88%)

    +1.17 (+1.79%)

    -11.00 (-0.60%)
  • NIKKEI 225

    -461.08 (-1.61%)

    +217.23 (+0.78%)
  • DAX

    +61.19 (+0.40%)
  • CAC 40

    +20.92 (+0.33%)

Invesco Enhanced Income Ltd - Publication of Circular

  • Oops!
    Something went wrong.
    Please try again later.
·11-min read
  • Oops!
    Something went wrong.
    Please try again later.

22 April 2021

Invesco Enhanced Income Limited

Recommended Proposals for the Reconstruction and Winding-up of the Company

On 1 March 2021, The Board of Invesco Enhanced Income Limited (the “Company” or “IPE”) announced that it had signed Heads of Terms with the Board of City Merchants High Yield Trust Limited (“CMHY”) in respect of a proposed merger with CMHY to be effected by way of a shareholder approved contractual scheme of reconstruction (the “Scheme”).

A circular in connection with the Scheme will shortly be sent to the Company's shareholders (the “Shareholders”) including details of the Proposals and to convene a general meeting of the Company (the "General Meeting") to seek approval from Shareholders for the implementation of the Proposals (the "Circular").

Under the scheme, the Company's Shareholders will receive New CMHY Shares on the basis of the respective adjusted net asset values of each company. Upon the Scheme becoming effective, it is proposed that the name of CMHY be changed to “Invesco Bond Income Plus Limited” ("BIPS").

The Proposals, which are unanimously recommended by the Board, comprise a scheme of reconstruction and the summary winding up (solvent liquidation) of the Company pursuant to which Shareholders will be entitled, in respect of their shareholdings, to receive New CMHY Shares.

Background to the Proposals

IPE and CMHY share many similarities: both are managed by Invesco and have the same lead portfolio manager, Rhys Davies; the Company and CMHY invest in the same asset class with similar investment objectives and policies; there is significant overlap between the two portfolios; and the Company and CMHY have many common shareholders.

The Board is very aware of the benefits that accrue to shareholders from greater economies of scale including lower ongoing charges and increased liquidity. In light of this and the similarities between the Company and CMHY, the Board entered into discussions with the CMHY Board with respect to a proposed merger and both the Board and CMHY are in agreement that the interests of Shareholders and CMHY Shareholders would be best served if the assets of the Company and CMHY were merged into a single entity.

Conditional upon the Scheme becoming effective, the Proposals would result in the Company being wound up and the assets and undertaking of the Company transferring to CMHY, with Shareholders being issued New CMHY Shares.

It is proposed that the enlarged entity will be renamed Invesco Bond Income Plus Limited (“BIPS”) which, based on the existing net assets of CMHY and IPE, would have net assets in excess of £300 million. A resolution to change the name of the Company will be put to the Shareholders at the General Meeting. The current portfolio manager of both CMHY and IPE, Rhys Davies, will continue as the portfolio manager of BIPS.

(The above proposals are referred to herein as the “Proposals”.)

Benefits of the Proposals

The Directors consider that the Proposals should have the following benefits for IPE Shareholders:

  • Greater scale through the combination of similar investment portfolios: Shareholders will be able to continue with the same fund management company and investment manager with a similar investment style. Rhys Davies currently manages both funds with a good track record and does so with a similar investment objective of high income and a focus on high-yield fixed-interest securities. There is a high degree of overlap between the two investment portfolios.

  • Lower management fee arrangements: In connection with the Proposals, it has been agreed with the Investment Manager that the management fee will be reduced to an annual amount equal to 0.65 per cent of the total assets less current liabilities to reflect the larger size of BIPS. This is a reduction from the Company's tiered annual management fee with a current blended rate of 0.76 per cent of the Company's net assets.

  • Lower ongoing charges: In addition to the change in management fee arrangements, the other costs of the Company will be spread across a larger asset base resulting in further economies of scale and a reduction in ongoing charges ratio.

  • Sustainable income level: It is anticipated that the income yield payable to Shareholders will be placed onto a more sustainable basis as a consequence of the transaction. In addition, Shareholders will be paid a special pre-liquidation dividend of 0.75 pence per Ordinary Share ahead of the transaction.

  • Increase in scale and improved liquidity: The Board expects that the enlarged entity will benefit from greater liquidity in its shares.

  • Potential for strong share price rating: The Board believes that the above benefits should assist BIPS's shares in maintaining a strong rating as the greater scale of BIPS is expected to result in broader market appeal.

Conditions of the Proposals

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

  • The passing of the Resolutions to be proposed at the General Meeting, or any adjournment of the General Meeting, and any conditions of such Resolutions being fulfilled;

  • The CMHY Resolutions being passed and becoming unconditional in all respects;

  • The approval of the Financial Conduct Authority and the London Stock Exchange to the Admission of the New CMHY Shares to the Official List and to trading on the main market of the London Stock Exchange, respectively;

  • The novation of the Repo Contacts and FX Forwards to CMHY with effect from the Effective Date; and

  • The Directors resolving to proceed with the Scheme.

If any of the above conditions are not satisfied, the Proposals will not become effective, the Company will not proceed with the winding-up and instead will continue in existence. In these circumstances, the Directors will reassess the options available to the Company at that time.


In connection with the Proposals, it is proposed that the BIPS Board would target an annualised dividend of 11 pence per share over a period of three years following the implementation of the Scheme by way of twelve quarterly dividend payments of 2.75 pence per share, with the first such dividend being the second interim dividend for the year ending 31 December 2021 which is expected to be declared in June 2021. This is equivalent to approximately 4.22p per annum per share for Shareholders. On the implementation of the Scheme, the target total dividends per share for the year ending 31 December 2021 would therefore increase to 10.75 pence per share (being the First Interim Dividend of 2.5 pence per share and three further quarterly dividends of 2.75 pence per share).

It is anticipated that dividends will be substantially covered by net income from the portfolio although BIPS will support the target dividend over this period through the use of revenue and capital reserves if necessary. Thereafter, the BIPS Board shall give consideration to its ongoing dividend policy, taking into account the annualised net income from its portfolio and the market environment at that time.

This proposed dividend policy has been agreed between the IPE Board and the CMHY Board in recognition of the differential in income distribution ratios adopted by each of the two companies and is intended to provide a path towards a sustainable income distribution to shareholders of BIPS.

Whilst the target dividend of 11 pence per share would result in a reduction in the annual dividend income for Shareholders compared with IPE's historical dividend pay-out, Shareholders will be paid a special pre-liquidation dividend of 0.75 pence per Ordinary Share ahead of the transaction, which is expected to be approximately equal to the reduction for the first year following the merger.

IPE's dividend has been supported by the use of revenue reserves for several years. As noted in IPE's 2020 Annual Financial Report, the medium term effects of Covid-19 will likely bring a prolonged period of very low interest rates, in light of which the Board would be reviewing whether the dividend policy is sustainable, balancing the need for current income against the requirement to preserve investors’ capital to earn that income in coming years. The Board has taken this into account when considering the dividend proposals set out above and believes they will continue to provide an attractive level of income for Shareholders over the long-term.


While the maximum gearing level shall remain at the level within the CMHY investment policy of 30 per cent. of total assets, it is intended that, immediately following the implementation of the Scheme, the net gearing of the BIPS portfolio will be approximately 10 per cent. of net assets.

Proposed Board Changes

Following completion of the Proposals, BIPS will have board representation from both IPE and CMHY and will be chaired by Timothy Scholefield, current Chairman of CMHY (the "BIPS Board"). The BIPS Board will comprise six non-executive directors all of whom will be independent of the AIFM and the Investment Manager.

The proposed BIPS Board will be as follows:

  • Timothy Scholefield (Chairman), who is the existing chairman of CMHY;

  • Kate Bolsover, who is an existing director of the Company, and is proposed to be appointed senior independent director of BIPS; and

  • Caroline Dutot, who is an existing director of CMHY;

  • Heather MacCallum, who is an existing director of CMHY;

  • Tom Quigley, who is an existing director of CMHY;

  • Christine Johnson, who is an existing director of the Company.

In accordance with Provisions 5.2.6 and 6.2.13 of the AIC Code, the Board has identified that Kate Bolsover and Timothy Scholefield are both directors of Fidelity Asian Values Plc ("FAS"). However, Timothy Scholefield does not intend to stand for re-election to the board of FAS at the annual general meeting to be held in December 2021. It is noted that the majority of the Board of the Enlarged Company will be independent of each other.


The Circular is expected to be published shortly and copies will be available for inspection on the Company’s website In addition, a copy of the Circular has been submitted to the National Storage Mechanism and will shortly be available for viewing online at the following website address:

The General Meeting

The General Meeting will be held at the offices of JTC Fund Solutions (Jersey) Limited, 28 Esplanade, St Helier, Jersey JE2 3QA at 10.00 a.m. on 19 May 2021 but will follow the minimum legal requirements for a general meeting. In line with current guidance, physical attendance by members at the General Meeting may not be feasible and is therefore discouraged. Arrangements will therefore be made by the Company to ensure that a minimum number of Shareholders required to form a quorum will attend the General Meeting in order that the meeting may proceed.

Given that it may not be feasible for Shareholders to attend the General Meeting, Shareholders are strongly encouraged to appoint the Chairman of the General Meeting as their proxy to vote on their behalf at the General Meeting.

Expected Timetable


Ex dividend date for interim dividend

8 April 2021

Record date for interim dividend

9 April 2021

Ex dividend date for special dividend

29 April 2021

Payment date for interim dividend

30 April 2021

Record date for special dividend

30 April 2021

Record Date for entitlements under the Scheme

close of business on 13 May

Calculation Date

5.00 p.m. on 14 May 2021

Latest time and date for receipt of Forms of Proxy

10.00 a.m. on 17 May 2021

Suspension of listing of Ordinary Shares

7.30 a.m. on 19 May 2021

General Meeting

10.00 a.m. on 19 May 2021

Effective Date for implementation of the Scheme

19 May 2021

Payment date for special dividend

20 May 2021

CREST accounts credited with, and dealings commence in, New CMHY Shares

As soon as practicable after 8.00 a.m. on 20 May 2021

Certificates despatched in respect of New CMHY Shares during or as soon as practicable after

Week commencing 24 May 2021

Cancellation of listing of Ordinary Shares

as soon as practicable after the Effective Date

Terms used and not defined in this announcement have the meanings given in the Circular unless the context otherwise requires.

This announcement does not contain all the information which is contained in the Circular. Shareholders should read the Circular to make an informed decision in respect of the Proposals

For further information please contact:

JTC Fund Solutions (Jersey) Limited +44 (0) 15 3470 0000

Hilary Jones

Invesco Asset Management Limited +44 (0) 20 3753 1000

Will Ellis

Guy Short

J.P. Morgan Cazenove (Financial Advisor to IPE)+44 (0) 20 7742 4000

William Simmonds

Alexis Owuadey

Important Information

This announcement contains information that is inside information for the purposes of the Market Abuse Regulation (EU) No. 596/2014. The person responsible for arranging for the release of this announcement on behalf of IPE is Hilary Jones of JTC Fund Solutions (Jersey) Limited.