Listed investment companies face fresh pressure to address the scourge of perpetually trapped shareholder value after one of the ASX's largest LICs, Milton, agreed to a $10.8 billion merger that will transform it into a conventional investment company.

Milton will combine with Washington H. Soul Pattinson, a larger rival, in a deal announced on Tuesday to create a listed portfolio that will trail only Magellan’s mammoth global equity vehicle in size on the local sharemarket.