An investment trust has proposed a 66 per cent tender offer after reaching an agreement with activist investor Saba Capital.
Herald Investment Trust’s latest move stops the threat of Saba, which owns a 30 per cent stake in the fund.
This morning (May 7), it was also announced that Aberdeen Investments will become the manager of Herald.
The investment trust’s team, including lead manager Katie Potts will join Aberdeen as part of the deal.
Saba has entered into a three year standstill agreement with Herald and Aberdeen, under which it has committed not to put forward any proposals to shareholders or seek to change the board.
The 66 per cent tender offer will let shareholders take half of their stake as assets and half as cash.
Saba has agreed to vote in favour of the proposals and tender all the shares it owns.
Andrew Joy, chair of Herald Investment Trust, said: “I am delighted that agreement has been reached for Herald Investment Trust to continue with its successful investment mandate, and end the impasse between different groups of its shareholders.”
He said the proposal will allow investors to reduce their holdings and the transfer to Aberdeen along with the team will deliver continuity of the investment approach.
This is what shareholder engagement looks like when boards act in the interests of the people they serve
Joy added: “Through these proposals, Herald can continue as a leading investor in small cap tech and communication stocks globally, which represent a large and underserved investment opportunity.
“In all the circumstances, this is good news for shareholders, whether continuing or exiting, for the City of London and for tech companies, including portfolio companies here in the UK.”
In February, Herald Investment Trust cancelled a previous tender offer after Saba Capital Management voted against it, the second time the firm had tried to oust the board.
Saba’s founder Boaz Weinstein called today’s proposal a successful outcome from its original campaigns against UK investment trusts.
He said: “HRI 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.
“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.”
It is expected a notice of the general meeting will be published towards the end of this month with a tender offer launched at the same time.
The board expects a meeting to approve the tender offer will be held at the end of June and if approved would complete in July.
tara.o’connor@ft.com
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