Blackrock trusts agree peace deal with Saba Capital
A host of Blackrock-run investment trusts have made a peace deal with US hedge fund Saba Capital, amid its activist campaign to take over the boards of several UK trusts.
In a series of stock exchange announcements, the Blackrock trusts said that they had made an agreement with Saba to be left alone by the activist investor until 2027.
Specifically, Saba had pledged to not put forward any resolutions to the trusts, change the boards of the trusts, try to influence the boards, and not engage in short selling or takeover attempts.
The news comes amid Saba’s campaign against seven UK trusts, aiming to unseat their boards and replace them with members of Saba’s leadership.
Led by Boaz Weinstein, the hedge fund has accused trusts of failing to perform, and pushed for shareholder votes to “elect new directors with a concrete plan to deliver shareholder value”.
The plan has quickly been met with backlash from the investment industry, with trade bodies like the Association of Investment Companies (AIC) and brokers rallying behind the trusts.
“Given the emphatic response push back from the industry against Saba’s proposals and the number of stakes in investment companies Saba has already amassed, it will probably be quite busy until 2027 if it decides to continue with its proposed asset grab,” said Quoteddata analyst Matthew Read.
Who has signed the peace deals?
Saba previously disclosed a 10 per cent stake in one of the Blackrock trusts, the Blackrock Smaller Companies trust, but does not hold a stake in any other of the trusts.
The other trusts the hedge fund made an agreement with are Blackrock World Mining, Blackrock Energy and Resources Income, and Blackrock American Income.
“It is interesting to see these statements all arrive on the day that the first of the requisitioned meetings of the seven trusts that Saba has targeted so far kicks off with Herald,” added Read.
“We think that this statement reflects the fact that Saba has previously engaged in similar attacks in the US, that have involved BlackRock funds, which have ultimately resulted in both litigation and now there is legislation proposed that, if enacted, will limit Saba’s to pursue these sorts of attacks.”
Last night, Saba also made an agreement with two US-based Blackrock trusts, which entailed Blackrock buying back shares from Saba in exchange for activist campaigns against the asset manager ending.
Despite the friendly agreement between Saba and Blackrock, there are still a notable number of UK trusts run by the asset manager who were not part of the peace deal, including the Blackrock Income and Growth and Blackrock Frontiers trusts.