New York hedge fund Saba Capital Management has secured a deal with Herald Investment Trust that will allow shareholders to exit at close to net asset value.
The agreement marks the sixth successful outcome from Saba’s seven UK investment trust campaigns launched in December 2024.
Under the deal, Herald will conduct a tender offer for up to 66% of its issued share capital, providing Saba – the trust’s largest shareholder – with a full exit route.
Boaz Weinstein, founder and chief investment officer at Saba, said: “Six successful outcomes from our seven original UK campaigns — that record speaks for itself. Shareholders will now have real choice: immediate liquidity close to NAV, or continued exposure to the same strategy they believe in under a stronger institutional platform.”
He added: “This is what shareholder engagement looks like when boards act in the interests of the people they serve, and it is what Saba will keep demanding across the UK investment trust sector.”
Saba has agreed to a three-year standstill during which it will not seek to change the composition of Herald’s board or influence company policies.
As part of the agreement, Herald’s management contract is being transferred from Herald Investment Management to Aberdeen Investments, with the investment team led by founder Katie Potts moving across.
Potts said: “Herald has delivered a clear and successful investment strategy since 1994, and this disciplined approach will remain unchanged with Aberdeen, who I look forward to joining. Looking ahead, we will benefit from Aberdeen’s enhanced marketing reach and will endeavour to continue to deliver above average returns for shareholders.”
The agreement follows Saba’s battle with Edinburgh Worldwide Investment Trust which resulted in five board members being ousted. A sixth was already retiring.
Dan Coatsworth, head of markets at AJ Bell, said: “Both sides appear to be declaring victory, which is slightly odd. Herald says it has secured its future, while Saba says it has now won six campaigns against UK investment trusts. While both sides have got something they want, it still feels like a compromise.
“Herald continues to operate, but risks giving up some of its assets. Saba bought cheaply and can sell a chunk at fair value, yet the standstill agreement means it is effectively silenced as an activist by Aberdeen.
“The investment trust industry has been tearing its hair out over the activist’s meddling and might think the Herald outcome is the blueprint to follow if it means Saba can eventually go away.”
Coatsworth said Saba has agreed to stop “any further meddling” with Herald for three years and the same for a further eight investment trusts managed by Aberdeen.