Finsbury plans Games Workshop buying spree after M&A windfall

The FTSE 250 investment trust is preparing to use a windfall from a string of acquisitions in its portfolio to launch a buying spree of shares in Games Workshop, the Warhammer owner

Nick Train’s Finsbury Income and Growth fund is gearing up to boost its holdings in Games Workshop following a windfall from a series of takeovers within its portfolio.

The FTSE 250 investment trust – whose heritage stretches back more than a century – revealed intentions to deploy both borrowing and proceeds from the buyouts of Schroders and Intertek, where it held stakes, to fund a purchasing campaign targeting the “fantastic” Warhammer owner.

At the closed-end fund’s most recent shareholder briefing, co-manager Madeline Wright highlighted Games Workshop’s robust margins and significant American market expansion as catalysts for a renewed growth trajectory at the company, notwithstanding the fact its share price has already more than tripled over the past four years.

“The appetite for this kind of content is huge,” she told investors, adding: “We’re currently building the position, and we’re going to continue to do that with the increased gearing and – depending on the timing – perhaps the cash from the M&A [mergers and acquisitions] as well.”

The decision represents an unusual instance of portfolio reshuffling at Finsbury, amongst the UK’s largest investment trusts, following the departure of two long-held investments from the public markets this year. Investment manager Schroders and Intertek have both accepted offers from Nuveen and EQT respectively, providing celebrated stockpicker Train with proceeds running into tens of millions of pounds, as reported by City AM.

Earlier this year, the trust also unveiled plans to take on more debt in an attempt to boost returns and demonstrate its “conviction” in a portfolio that has delivered several successive years of lacklustre performance. Finsbury more than tripled its gearing – the term used to describe the amount of debt rolled into a fund or investment – from £29.9m to £100m, leaving the FTSE 250 vehicle with a substantial war chest to deploy into a “collection of outstanding, in most cases world class, UK-listed companies” in the months ahead, it said.

Wright revealed that alongside increasing its stake in Games Workshop, in which the trust first invested in autumn last year, Finsbury would deploy the funds to bolster its positions in flagship holdings such as the London Stock Exchange Group, Sage and Relx. The group would also establish positions in new stocks, she added.

In a separate development, Wright delivered a scathing assessment of Rathbones’ recent clash with the Financial Conduct Authority, which saw the FTSE 100 giant compelled to suspend £900m worth of inflows.

In what were her fund’s first public remarks since the fiasco, she said: “It’s very disappointing that this has happened. From our perspective, there’s going to be an overhang on the shares and the business.

“It’s probably important to note that the management team in place now was not the management team that was in place when this happened,” she added. “And that’s important because if that was not the case, we would probably have been speaking to the board about whether new pairs of eyes were needed.”