An investment trust targeted by Saba Capital has warned it faces an ‘existential threat’ if the US corporate raider triumphs in a vote next month.
The Edinburgh Worldwide Investment Trust (EWIT) urged shareholders to oppose Saba’s plans to oust its board and replace them with its own nominees at a meeting scheduled for February 14.
Saba, run by Wall Street financier Boaz Weinstein, owns around 21 per cent of the trust and will win if at least 50 per cent of voting shareholders support the proposals.
This means it can succeed if a large number of investors do not show up to vote against the plans.
EWIT’s chairman Jonathan Simpson-Dent accused Saba of an ‘overt land grab’ and trying to ‘exploit’ the fact that the trust’s large number of retail shareholders do not normally vote.
Retail investors hold around 50 per cent of the trust’s shares, meaning they have enough power to vote down the US firm’s proposals.
‘I am deeply troubled by Saba’s proposals. Investment trusts are extremely democratic by construction – Saba’s proposals are not,’ Simpson-Dent said.
‘[Shareholders] have chosen Edinburgh Worldwide for its unique and early access to hidden gems, ground-breaking businesses which in many cases are not available on the public markets. Let’s not let Saba take that away.’
Announcing the date of its vote on Saba’s plans, EWIT claimed the US firm had ‘no apparent track record’ of investing in specialist small companies, the main focus of the trust.
It added that the hedge fund’s proposals risked ‘prioritising Saba’s commercial self-interest’ over ‘value creation for the benefit of shareholders.’
Responding to the announcement, a Saba spokesman said: ‘EWIT has underperformed its benchmark for the last three years and its recent uptick in total return appears to be largely driven by Saba’s buying – not due to investing in “hidden gems” in the private markets or making improvements at the board or management level.’
With assets of £812million, Baillie Gifford-managed EWIT offers investors a portfolio of what it describes as businesses operating at ‘frontiers of technological innovation’.
Elon Musk’s Space X is a top holding with Californian quantum computing firm PsiQuantum and Massachusetts-based drug group Alnylam Pharma.
It is one of seven investment trusts being targeted by Saba, with Herald – the largest trust in the US firm’s crosshairs – set to be the first to face a vote tomorrow.
Simpson-Dent told the Mail that Saba was offering a ‘short-termist’ approach to the trust which he said was a ‘total mismatch’ with the purpose of the business.
‘It’s made it much easier for us to show our investors how different they are to our current approach,’ he added.
The EWIT chairman has been among the sharpest critics of Saba, accusing Weinstein and his allies of trying to ‘make a quick buck’ by taking over the trusts.
Others outside the trust have also critiqued Saba’s plans. Baroness Altmann, a former pensions minister, has accused it of trying to ‘hijack’ the trusts and trying to ‘take advantage of lack of protections for UK retail shareholders’.
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