Ashoka Whiteoak Emerging Markets Trust Plc (LSE:AWEM) has made a bold merger offer for Abrdn-run Asia Dragon Trust plc (LSE:DGN) as it looks to ramp up its assets after raising just £30 million in its flotation a year ago. The now £35 million investment trust, whose portfolio is run by Prashant Khemka, is proposing an all-share merger with the much larger but poorly-performing £600 million Asia Pacific trust. It has made a 50% tender offer at a 1% discount for investors who don?t want to be part of an Asia-weighted emerging markets fund.

Asia Dragon, which swelled its assets by £200 million through a merger with stablemate Abrdn New Dawn last November, jumped 7%, or 28 pence, to 411 pence, narrowing its 15% discount. Martin Shenfield, Chair of AWEM, says he has received supportive feedback from 56% of Asia Dragon?s shareholders but has not heard back from its board since 1 April, when it acknowledged receipt of the formal proposal. ?Sadly, we have not received any meaningful engagement with the board of Asia Dragon,?

Shenfield said. He said a merger with AWEM, which trades on a smaller 4% discount, would deliver a ?significant uplift? to Asia Dragon shareholders and offer cost savings given the fund manager does not charge a standard annual management fee and is only paid a 30% performance fee in shares if returns beat the MSCI Emerging Markets index.

As a discount control measure, it also offers investors an annual tender offer, enabling investors to sell their shares at close to asset value. Asia Dragon issued a holding statement, confirms it had received an approach from AWEM. It urged shareholders to take no action and said it would make a further announcement in due course.