Summary
- Saba gears up for a crucial three days, with five investment trusts voting on its proposals to replace their current boards.
- The investment trusts involved, as well as industry experts, have called Saba’s proposals “self-interested” and accused the hedge fund of attempting a power-grab.
- Saba, however, maintains that its actions have already led to greater value for shareholders.
- Herald Investment Trust has already defeated the Saba proposal, thanks to record levels of proxy voting via investment platforms.
When will we know the results of the voting?
The requisitioned general meetings at Baillie Gifford US Growth (LON:USA) and Keystone Positive Change (LON:KPC) are just getting underway.
It could be a few hours until we know the results, though. Stay tuned through the afternoon as we bring you live updates and reaction.
AIC: Saba proposals would radically change investment trusts
In a statement to MoneyWeek, the Association of Investment Companies (AIC) said that “these upcoming votes couldn’t be more important for the shareholders of the targeted trusts.
“The Saba proposals would radically change these investment trusts by replacing the board and changing the mandate, manager and fees. Shareholders need to look carefully at the proposals, consider the response from the seven boards and vote their shares.
“Saba’s proposals would initially replace the current, independent boards of the seven trusts with just two new directors: Saba’s own representative and another director nominated by the firm,” says Richard Stone, CEO of the AIC. “Two directors would be an unusually small board for an investment trust given the functions the board performs, and having both directors so closely aligned to one major shareholder inevitably raises questions.”
The AIC urges shareholders in the trust to consider whether they are comfortable with the idea of the trusts having such a small board, with such close ties to a single entity.
“Although Saba suggests it will appoint further independent directors at a later stage, shareholders need to think through the implications of these two new directors taking control over the strategy, manager and mandate – fundamentally changing the risk and return profile of the trust,” its statement said.
When are investment trust general meetings taking place?
The timetable for general meetings to vote on Saba's proposals is below. As you can see, the first meetings – those of Baillie Gifford US Growth and Keystone Positive Change are taking place today. We'll bring you live coverage of the results of these meetings as they happen.
| Investment trust | General meeting date |
|---|---|
| Baillie Gifford US Growth | 3 February 2025 – 12 noon |
| CQS Natural Resources Growth & Income | 4 February 2025 – 11am |
| Edinburgh Worldwide | 14 February 2025 –11.45am |
| The European Smaller Companies Trust | 5 February 2025 – 12.30pm |
| Henderson Opportunities Trust | 4 February 2025 – 10 am |
| Keystone Positive Change | 3 February 2025 – 12 noon |
Source: Association of Investment Companies
The Saba saga so far
On 19 December, Saba announced that, as a significant shareholder in the trusts in question, it had requisitioned general meetings at seven UK investment trusts in order to address what it called “underperformance, persistent trading discounts and disengaged management teams”.
Its ‘Mind the Gap’ campaign sought to address steep trading discounts to net asset value (NAV) at the seven trusts by displacing their boards, and replacing them with new boards that, while including independent members, would include at least one of the hedge fund’s own employees as directors.
The proposals have attracted widespread criticism from the boards of the trusts themselves as well as investment trust industry experts. Saba has responded by claiming it is acting in shareholders’ best interests.
Saba’s campaign stumbled at the first hurdle when Herald Investment Trust shareholders voted against its proposals, but five more general meetings are taking place this week.
Good morning, and welcome to our live blog following a crucial week for the UK’s investment trust industry.
Over the next three days, five trusts will vote on proposals from New York hedge fund Saba Capital seeking to replace their current managers with its own appointees.
Follow this live blog for all the latest updates, reaction and analysis as shareholders of the investment trusts vote on Saba’s proposals.