FPL - FPL: Merger Arbitrage Opportunity In The MLP CEF Space
2024-04-30 23:58:36 ET
Summary
- MLP CEFs are taking corporate actions to close discount gaps, with some engaging in share repurchases and others merging into ETFs.
- FPL, an MLP CEF, is set to merge into the FT Energy Income Partners Enhanced Income ETF (EIPI) in May 2024.
- Buying FPL now offers a 2% discount to NAV that will disappear after the merger, and investors will have exposure to the MLP asset class in an unleveraged and less volatile structure.
- It is encouraging to see MLP CEF managers finally taking drastic actions to close the discount gaps.
Thesis
It looks like the MLP CEF space is finally capitulating and taking various forms of corporate actions to close the discount gaps. After relentless pressure from Saba capital, ClearBridge Energy Midstream Opportunity Fund Inc. ( EMO ) engaged in significant share repurchases last year, while the First Trust MLP CEFs, including the First Trust New Opps MLP & Energy Fund ( FPL ), are now shedding their leverage and CEF structure, being merged into an ETF....
FPL: Merger Arbitrage Opportunity In The MLP CEF Space