Two more investment trusts REJECT Saba takeover in fourth and fifth defeats

Saba has suffered its fourth and fifth consecutive defeat at the hands of investment trust investors after the shareholders of two more funds rejected the hedge fund’s takeover proposals.

Henderson Opportunities (HOT) and CQS Natural Resources Growth and Income (CYN) are two of seven investment trusts targeted by Saba’s plans to seize control of boards and management.

The hedge fund accuses boards and management of failing to tackle recent poor performance and persistent discounts to net asset value.

Saba’s shareholding in HOT is 24.7 per cent and the trust said 65.4 per cent of total shareholder votes cast were against Saba’s proposals.

Just 0.72 per cent of the trust’s total voting rights unconnected to the hedge fund backed Saba. 

Meanwhile over 59 per cent of CYN votes cast were against the proposals, with 98.6 per cent of votes cast by non-Saba shareholders voting against the hedge fund. 

Saba ultimately wants to merge some or all of the trusts into a new vehicle targeting other London-listed funds with large discounts to NAV.

European Smaller Companies and Edinburgh Worldwide investors will vote on 5 and 14 February, respectively.

Saba’s proposals have so far been rejected by investors of HOT, CYN, Herald Investment Trust, Baillie Gifford US Growth and Keystone Positive Change.

Christopher Casey, chair of CYN, said: ‘The strong vote against Saba’s proposals speaks loud and clear – the majority of our shareholders have shown the confidence in the existing Board and have voted to have them steer the Company in the future.

‘Looking to the future, the Board will continue its efforts to review the options available to us to preserve and deliver value to all our shareholders. This will be communicated to the market by June 2025.’

Chair of Henderson Opportunities Wendy Colquhoun said the result ‘shows that shareholders do not want to be part of a Saba managed vehicle, but instead want to be able to retain full choice over what happens to their investment’.

HOT’s board will now turn its attention to a recently announced a reconstruction scheme, which would will see the trust voluntarily wound-up.

Investors will have the option of rolling over their investment at residual net asset value into the Janus Henderson UK Equity Income & Growth Fund or receive a cash exit.

However, the proposals will need 74 per cent of shareholders to vote in favour of the scheme.

Colquhoun added: ‘The Board’s priority now is delivering full and free choice to all shareholders via the proposed scheme of reconstruction.

‘All shareholders, including Saba, will have the choice of an unrestricted cash exit at NAV and/or the option of a tax-efficient rollover into a UK equity focused open-ended fund.

‘As part of its campaign, Saba has publicly stated its aim to deliver substantial liquidity options to all shareholders.

‘The scheme proposed by the Board is designed to achieve this. The Board therefore calls on Saba to respect the decision made by the Company’s shareholders at today’s meeting and support the scheme of reconstruction.’

James Carthew, head of investment companies QuotedData, warned Saba ‘still has sufficient votes to disrupt the company’s plans but it would be nonsensical of it to do so’. 

He added: ‘This is the second time that Saba seems to have voted fewer shares than expected. I am starting to wonder if it had already started selling them before the meeting in expectation that it was going to lose. 

‘Given the consistent pattern of rejecting Saba’s proposals, it would perhaps be a better idea if it simply withdrew the remaining requisitions.’