Boaz Weinstein’s hedge fund Saba Capital has agreed to suspend activist campaigns against nine of its biggest London-listed funds for three years, following an agreement to secure the future of the London-listed funds. Herald Investment Trust.
Herald announced on Thursday a tender offer for up to 66% of its issued share capital. The aim is to allow Saba, the largest shareholder, and other investors to sell at a price close to net asset value or remain invested.
This comes after activist Saba declared victory in a controversial battle with SpaceX investors edinburgh worldwide Last month, the company dismissed its chairman and five directors after a long-running dispute.
Saba has agreed to an irrevocable undertaking to make a full bid for the Herald shares, and is likely to benefit significantly from the agreement given that the trust has almost consistently traded at a discount to NAV since Herald first purchased the shares in 2023.
As part of the deal, management responsibilities for the fund will also be handed over to Aberdeen Investments later this year, with current fund manager and founder Katie Potts joining seven colleagues at the London-based firm.
“Herald has been delivering clear and successful investment strategies since 1994, and this disciplined approach continues at Aberdeen,” Potts said in a statement.
“We remain firmly focused on the technology and communications sectors, which continue to benefit from outstanding innovation and strong long-term growth prospects.”
Mr Saba said the agreement represented the successful outcome of the sixth of the original seven campaigns in the UK.
Herald Investment Trust.
Herald is one of about 50 London-listed funds that Saba used to take advantage of high discounts to overhaul its strategies and build positions worth a sixth of the total market.
As part of the agreement, Saba has agreed to a three-year suspension, meaning it will not vote against the Herald board during that period.
Saba has also agreed to enter into similar standstill agreements with eight other London-listed Aberdeen investment trusts, with total assets of approximately $17 billion, if their independent boards decide to participate.
both sides declare victory
Christian Pittard, head of closed-end funds and managing director of corporate finance at Aberdeen Group, said Saba’s “co-operation and determination to find a way forward that benefits all shareholders” “enabled us to maintain this trust and to work together to deliver a positive outcome for all”.
He said: “The UK’s agreement to expand the scope of active trusts provides a practical and constructive way forward and helps stabilize the trusts that have signed the stay.”
Herald continues to trade at a 9.7% discount to its net asset value of just under 3.3 billion pounds ($4.5 billion), according to the Investment Companies Association.
However, this ratio has reduced significantly from its low of 25.2% in March 2022, and the Trust has outperformed its peers on a share price and NAV total return basis over the past three years.
“Both sides seem to be claiming victory, which is a little strange,” Danny Hewson, head of financial analysis at AJ Bell, said in an email comment to CNBC.
“Both parties got what they wanted, but it still feels like a compromise. Herald remains open but risks giving up some of its assets. Saba bought cheap and can sell some at fair value, but the cease-and-desist agreement effectively means the company is being silenced as an activist by Aberdeen.”
“The mutual fund industry is grappling with activist intervention and may see the Herald results as a blueprint to follow if it means Saba’s eventual demise.”
