‘We can only hold back the tide for so long’: Edinburgh trust urges investors to back exit plan
The chair of one of Britain’s oldest investment trusts has urged its shareholders to back its proposed exit plan, saying the board had “exhausted all other options” in its bid to prevent a US activist investor from seizing control of the trust.
Jonathan Simpson-Dent told investors that Edinburgh Worldwide Investment Trust (Ewit) remained under “persistent attack” from Boaz Weinstein’s Saba Capital, and that its offer to crystallise their holdings was the only remaining avenue to avoid ceding control to its largest stakeholder.
“We can only hold back the tide for so long and we believe we are now at the end of the road – this decisive solution gives you a choice to opt out,” he wrote in an open letter. “This tender offer represents the culmination of all other avenues being explored and reflects our expectation that a change of control is likely in the very near future.”
Last week, Ewit revealed plans to offer its shareholder base the chance to realise almost all of their stake in the trust, in a final throw of the dice to prevent Saba from forcing through a governance shake-up at its next annual general meeting (AGM).
Saba campaign pushes investment trust to offer exit plan
The move is the latest twist in a years-long saga between the trust’s board and Weinstein’s activist hedge fund, which has been campaigning for an overhaul of Ewit’s investment and governance strategy since building up a major stake in several investment trusts in 2024.
Weinstein’s campaign has largely centred on the trust’s decision to sell down its stake in its “defining asset”, Elon Musk’s Space X, which he has previously claimed “defied commercial logic”. The move was emblematic of the board’s failure to “protect investors’ capital, address underperformance and portfolio management missteps”, he said in an open letter last month.
But the hedge fund’s efforts have been roundly rebuffed over a string of crunch shareholder votes in the intervening period, most recently when 92 per cent of the Ewit investors without links to Saba voted against its resolutions at a requisitioned general meeting in January.
Weinstein has since doubled down on his bid to install three new board members and a new investment manager, tabling a swath of fresh motions for shareholders to vote on at its upcoming annual general meeting (AGM) that prompted Ewit’s tender offer.
The move gives the Baillie Gifford-run investment trust’s backers the opportunity to instantly realise their share of its assets, save for the fund’s flagship holding in Space X. In the case of Elon Musk’s rocket company, investors would wait until a ‘future liquidity event’ – like its planned blockbuster IPO – under the terms of the proposed offer.
In his letter, published to the London Stock Exchange on Monday, Simpson-Dent said that after a “detailed analysis” of Saba’s resolutions, the board had concluded that the hedge fund is “likely to succeed in imposing its new board”, forcing it to offer shareholders the exit plan.
“Saba will not back down until it has broken the status quo and grabbed control of the company’s agenda and future direction,” he wrote, adding: “This is not a situation your board wished to reach.
“Shareholders have already expressed their views twice, and the board has exhausted every reasonable and equitable solution with Saba. While it is clear that most of you did not want this outcome, Saba’s continued actions as a minority shareholder are exploiting weaknesses in the regulatory framework in order to force a fundamentally different direction for the company.”
The chair urged the trust’s investors to vote in favour of the tender, which he said would give them the opportunity to accept its exit plan at the AGM, which must be held before the end of April. Then, should the exit plan pass, investors should consider “whether [they] want to remain invested under Saba’s control, or… an option to get out now at a fair value”.
Saba was approached for comment.