Fidelity Emerging Markets Limited (LON:FEML) has announced that the Company has entered into a conditional share repurchase agreement with Strathclyde Pension Fund. Under the terms of the Repurchase Agreement the Company will, subject to obtaining the required shareholder approval, purchase Strathclyde’s entire beneficial holding of 16,441,177 Participating Preference Shares in the Company, which represents 25.7 per cent. of the Company’s aggregate voting share capital as at 29 August 2025 by way of a market acquisition in accordance with section 315 of the Companies (Guernsey) Law, 2008 (as amended).
Strathclyde has agreed to sell all of the Strathclyde Shares at a price per PP Share representing a discount of 14 per cent. to the net asset value per PP Share as at close of business two business days prior to the completion date in respect of the Repurchase. For the purpose of the Repurchase, the NAV is calculated cum income and with borrowings at market value. All of the Strathclyde Shares will be cancelled following repurchase.
Given the size of Strathclyde’s holding, the Repurchase may only be effected following the passing of a resolution of the Company’s shareholders at an Extraordinary General Meeting authorising the Repurchase. The Board will therefore publish a circular in due course, in which further details of the Repurchase will be set out, together with notice of an Extraordinary General Meeting of the Company at which approval will be sought (by way of special resolution) from shareholders for the Repurchase. The Repurchase is expected to complete in early November 2025.
Major shareholders have indicated they are supportive of the Repurchase.
The Board believes that the Repurchase is in the best interests of the Company and shareholders as a whole. There will be an immediate financial benefit that will accrue to ongoing shareholders, as there will be an estimated uplift to the NAV per PP Share of approximately 4 per cent.1.. Assuming the Repurchase is approved and effected, the Board considers that the costs of running the Company should remain competitive as compared to other closed-ended investment companies within the Association of Investment Companies’ Global Emerging Markets sector. Furthermore, the Board reaffirms its proactive approach to buying back shares, and going forward is prepared to do so in accordance with its ambition that the discount to net asset value at which the Company’s shares trade may ultimately be maintained in single digits in normal market conditions on a sustainable basis.
1. Based on the NAV per PP Share as at 29 August 2025 and estimated direct and indirect costs of the Repurchase.
Update on the Company
Performance comparison in GBP (%)
| Year to date(to 31 July 2025) | 1 year | 3 years(cumulative) | |
| NAV | 16.5 | 17.6 | 37.8 |
| Share price | 20.0 | 20.5 | 44.9 |
| Market index | 11.2 | 13.7 | 24.1 |
Source: Fidelity International, RIMES, as of 31 July 2025. Market index is the MSCI Emerging Markets Index (Net). Performance is shown bid-bid with income reinvested, in GBP, net of fees. Past performance cannot be relied upon as a guide to future performance.
The Company has performed strongly, outperforming its market index in both NAV and share price terms year to date, over 1 year and over 3 years. The discount to NAV at which the Company’s shares trade narrowed to under 10 per cent. at the end of July 2025. Against this performance backdrop, the Board and the portfolio managers are positive on the outlook for emerging markets over both the short and longer terms and the Board is pleased to observe that the extended investment toolkit available to the investment management team (unique in its peer group given its extensive use of both long and short positions) is having an appreciable impact on NAV performance.
Continuation Vote and Conditional Tender
The Company has committed to hold a continuation vote in 2026 and every five years thereafter. The Board re-confirms its intention to propose a continuation vote at the 2026 AGM.
The Company reconfirms its commitment to undertake a tender for up to 25 per cent. of its then shares in issue (excluding any shares held in treasury) should its NAV total return fail to exceed the benchmark over the five years ending on 30 September 2026.
Related Party Transaction
Strathclyde is a related party of the Company for the purposes of the UK Listing Rules on account of the size of its shareholding in the Company. Accordingly, the entry into the Repurchase Agreement is a related party transaction which falls within UKLR 8.2.1R. The Board, which has been so advised by Dickson Minto Advisers LLP, considers that the Repurchase is fair and reasonable as far as shareholders are concerned. In providing its advice, Dickson Minto Advisers LLP has taken into account the Board’s commercial assessments.
The Takeover Code
The Takeover Code applies to the Company. Under Rule 9 of the Code, any person who acquires an interest in shares which, taken together with shares in which that person or any person acting in concert with that person is interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Code is normally required to make an offer to all the remaining shareholders to acquire their shares.
Similarly, when any person, together with persons acting in concert with that person, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of the voting rights of the company, an offer will normally be required if such person or any person acting in concert with that person acquires a further interest in shares which increases the percentage of shares carrying voting rights in which that person is interested. An offer under Rule 9 must be made in cash at the highest price paid by the person required to make the offer, or any person acting in concert with such person, for any interest in shares of the company during the 12 months prior to the announcement of the offer.
Under Rule 37.1 of the Code, when a company repurchases its own voting shares, any resulting increase in the percentage of shares carrying voting rights in which a person is interested is treated as an acquisition for the purpose of Rule 9. However, Note 1 on Rule 37.1 also provides that a person who comes to exceed the limits in Rule 9.1 in consequence of a company’s redemption or purchase of its own shares will not normally incur an obligation to make a mandatory offer unless that person is a director, or the relationship of the person with any one or more of the directors is such that the person is, or is presumed to be, acting in concert with any of the directors.
The Company notes that as at 29 August 2025, City of London Investment Management Company (the Company’s largest shareholder) held 18,653,177 PP Shares (being 29.2 per cent. of the Company’s aggregate voting share capital as at 29 August 2025). If the Repurchase is effected, on the basis of its current shareholding, CoL would come to hold 39.3 per cent. of the Company’s aggregate voting share capital following the Repurchase. Accordingly, the completion of the Repurchase would, on the basis of current shareholdings, result in CoL coming to have an interest in shares in the Company carrying 30 per cent. or more of the voting rights of the Company.
On the basis that CoL does not have a representative on the board of the Company and is not acting in concert with any of the directors, The Panel on Takeovers and Mergers has confirmed that the repurchase will not trigger an obligation for CoL under Rule 9 of the Code.
On completion of the Repurchase, CoL will hold more than 30 per cent. but less than 50 per cent. of the voting share capital of the Company and therefore may not acquire further shares in the Company without incurring an obligation under Rule 9 of the Code to make a general offer to the Company’s other shareholders.
The Panel has also confirmed that the Company’s repurchase of its own shares pursuant to its general share buyback authority granted at the most recent AGM will not trigger an obligation for CoL under Rule 9 of the Code to make a general offer to the Company’s other shareholders.
A further announcement will be made upon publication of the shareholder circular.
Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.
