Tortoise Capital Advisors, a leading fund manager focused on traditional energy and power infrastructure investing, has revealed its plans to merge three of its closed-end funds into a newly formed actively managed exchange-traded fund (ETF). The merger will result in the creation of the Tortoise Power and Energy Infrastructure ETF, which aims to offer investors greater liquidity at net asset value.
The three closed-end funds being merged are Tortoise Power and Energy Infrastructure Fund, Tortoise Pipeline & Energy Fund, and Tortoise Energy Independence Fund, with Tortoise Power and Energy Infrastructure Fund being the surviving strategy. The ETF will adopt the accounting and performance history of Tortoise Power and Energy Infrastructure Fund and maintain a similar investment strategy, primarily focusing on fixed income and dividend-paying equity securities of power and energy infrastructure companies.
The merger of the closed-end funds into an actively managed ETF has been approved by the board of directors and aligns with Tortoise Capital’s commitment to providing shareholder value through strategic initiatives. The firm will continue as the manager of the newly formed ETF, retaining the same investment team that has been in place at the closed-end funds.
The combined assets of the three funds to be merged, including leverage, amounted to $313.3 million as of July 31, 2024. The management fee for the ETF is expected to be 85 basis points.
Tom Florence, CEO of Tortoise Capital, expressed confidence in the merger, stating, ‘We believe these actions are in the best interest of fund shareholders, providing them greater liquidity without a potential discount to net asset value. Actively managed ETFs will play an ever-growing role in fund investing, and we will continue to evaluate the structure for our other products.’
The transactions are anticipated to close in the fourth quarter, subject to requisite fund shareholder approvals, regulatory requirements, and customary closing conditions. Each merger is intended to qualify as a tax-free reorganization for federal income tax purposes. The company will provide more information on the proposed transactions in the proxy materials and registration statement materials that will be filed in the coming weeks.
Tortoise Capital Advisors, based in Overland Park, Kansas, is an SEC-registered fund manager specializing in energy and power infrastructure investments. With over $8 billion in assets under management as of July 31, 2024, the firm has a strong track record of investment experience and research spanning more than two decades. Tortoise Capital is well-positioned to capitalize on the ongoing global energy evolution, focusing on publicly traded companies in the energy and power infrastructure sectors.
For more information about Tortoise Capital Advisors, visit their website at www.Tortoiseadvisors.com.