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- Saba has acquired stakes in UK trusts at high discounts to net asset value
BlackRock has reached a deal with activist hedge fund Saba Capital that it hopes will protect its London-listed investment fund from the disruptions faced by its peers.
comes as Herald Investment Trust Shareholders face a vote today on the company’s future, amid Saba’s plans to overhaul and take over the boards and management of seven London-listed funds.
In four separate but nearly identical statements released Wednesday, BlackRock said Energy and resource income, American income, Smaller companies and World Mining investors who had obtained assurances from Saba that it would not attack the funds in a similar way.
Saba has been accumulating stakes in UK trusts at deep discounts to net asset value.
The hedge fund, which its critics accuse of “self-interest” and cynical exploitation of low voter turnout, says it plans to merge “some or all” of the seven investment trusts if it gets its way in every vote.
It will then build a portfolio made up of other London-listed investment trusts, which Saba says it will collaborate with to reduce discounts.
BlackRock moves to protect London-listed hedge funds from Saba activism
BlackRock Smaller Companies was one of 21 London-listed investment trusts flagged by broker Peel Hunt as potentially vulnerable to Saba’s attempted takeover, as the hedge fund had acquired a notable stake in the company.
Saba currently has no stakes in the other three trusts.
The asset management giant said Saba had agreed not to present “any proposal to shareholders or request any resolution or general meeting” from each of the companies.
Saba will not seek to make changes to the trusts’ boards or attempt to influence the management of the funds, according to BlackRock.
The hedge fund also agreed to support each board of directors on any shareholder resolutions, while refraining from targeting the trusts for short selling.
“Saba will not make any acquisition offer for the company,” BlackRock said of the agreement that will remain in force until 2027.
BlackRock added: ‘The company has not provided any monetary consideration to Saba or any of its subsidiaries in exchange for the benefits described above, and such benefits do not restrict the independence of the board or the company in any way.
‘The board is committed at all times to exercising the best standards of corporate governance, promoting the success of the company and putting the interests of shareholders as a whole first.’

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