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American activist Saba Capital failed in its attempt to oust the board of directors of the Herald investment fund, dealing the first blow in his campaign compared to seven UK-listed open-ended companies.
The majority of Herald shareholders voted Wednesday against the US hedge fund’s proposal to replace the trust’s board and install its own nominees, which could have paved the way for Saba to become an investment manager.
More than 65 percent of the votes cast were against Saba’s plans, according to a market announcement by the Herald. In addition to the vote in favor of Saba, which accounted for almost 35 percent, another 0.15 percent were in favor.
Andrew Joy, chairman of Herald Investment Trust, said the outcome represented “a clear, complete and indisputable rebuttal of Saba’s attempt to take control of your company and change its strategy against the wishes and interests of its non-profit shareholders.” -Saba.”
Joy said shareholders invested in Herald because they wanted to support small technology companies over the long term, noting that “they don’t want to be deprived of the opportunity to profit more of the same” and “don’t “have not invested in Herald as part of a short-term trading strategy.”
Saba, led by an activist investor Boaz Weinsteinconvened shareholder meetings at seven London-listed investment funds last month, saying their respective boards had failed to hold executives accountable for their poor performance.
The campaign marks one of the biggest shake-ups ever in the UK’s 150-year-old investment funds industry, which manages £266bn.
Saba’s defeat of Herald board comes a day after hedge fund agreed to stop its activist battle against 50 BlackRock funds in exchange for a takeover bid for two of them.
A large proportion of Herald’s shareholders are institutional investors such as wealth managers, with individuals making up less than a fifth of the register.
But the investment funds industry has warned that individual investors, who make up a larger proportion of the shareholding of the other six funds, are less involved in voting than institutions.
Jonathan Simpson-Dent, chairman of Edinburgh Worldwide, another trust targeted by Saba, said “this is only the first battle in a war against seven trusts” and warned that “shareholders cannot prove of complacency.”
The UK financial regulator has investment platforms contacted to ensure that retail investors are aware of upcoming votes.
Saba’s stakes in each of the trusts vary between 19 and 29 per cent and amount to a total of £1.5 billion.
Saba said in a statement that it “remains committed to putting shareholder interests first, generating returns for UK fiduciary investors and ultimately rehabilitating this broken sector”.
He added: “We urge the shareholders of the other six trusts at which we have convened general meetings to support Saba’s resolutions in order to put these trusts on the path to significant value creation. »