Second largest fund manager joins calls for shareholders to reject Saba coup

Janus Henderson has joined rivals in urging investors in his London-listed investment funds to reject an attempted takeover by US hedge fund Saba Capital.

The group, which has $382.3 billion in assets under management, told shareholders of its European small businesses and Henderson Opportunities The trusts will vote against the resolution presented by Saba in the elections scheduled for February 5 and 4 respectively.

It follows an intervention by £225bn asset manager Baillie Gifford, which urged investors in US Growth Trust, Keystone Positive Change and Edinburgh Worldwide to reject Saba’s resolutions.

Saba hopes to take control of seven London-listed trusts in which it has acquired substantial stakes, and efforts to overhaul each fund’s board will be followed by resolutions to appoint itself as investment manager.

The US firm has highlighted the high discounts to net asset value and performance issues affecting each trust, and has accused the respective boards and management of not taking sufficient action in response.

The boards and management of the affected trusts have accused Saba of self-serving and cherry-picking data to support its claims, as well as pointing out that performance has improved and discounts have been significantly reduced.

The boards have also highlighted the relatively high fees charged by Saba’s publicly available funds.

James Williams, chairman of Janus Henderson’s European Smaller Companies Trust, on Wednesday highlighted his fund’s “long-term outperformance” and warned shareholders that Saba is seeking to eliminate a “highly qualified independent board that acts in the interests of all stakeholders.” shareholders”.

Shares of European small companies have returned 18.9, 74.4 and 257.7 percent in one, five and 10 years, respectively, according to the Association of Investment Companies.

It has outperformed the average performance among its peers in the AIC European small business sector of 12.4, 37.6 and 172.2 percent over the same time periods, respectively.

The trust has a 2.1 percent discount to net asset value, having reduced significantly from around 13.5 percent in early 2024.

Williams added: “It is clear that Saba’s motives are selfish. He would like to appoint directors who are not independent of the company’s largest shareholder and has indicated that he may appoint himself as investment manager.

‘This could jeopardize shareholder protection, radically alter the company’s investment risk profile and deny investors the opportunity to benefit from the proven European small cap investment strategy.

“Therefore, the Board recommends that shareholders vote against the proposed resolutions.”

He also echoed warnings from Keystone’s board that “Saba is counting on a high proportion of shareholders not to vote,” adding that “investor participation is key and will determine the future of the company.”

Also echoing Keystone, Henderson Opportunities Trust chair Wendy Colquhoun told shareholders that Saba’s resolutions could cost them if implemented.

Henderson Opportunities has offered investors the possibility of a full cash outflow at net asset value or the option to reinvest in an open-ended fund (Janus Henderson UK Equity Income & Growth) while the trust prepares to liquidate.

Colquhoun warned: “If Saba is successful, this bid risks being canceled without a comparable replacement.”

‘Saba is trying to take control of the company without having guarantees of what will happen to the shareholders’ investments.

‘Saba wants to eliminate a strong and highly qualified independent board that acts in the interests of all shareholders and replace it with its own non-independent board that can put Saba’s interests first.

“The board’s message to shareholders is clear: please exercise your vote and do not allow Saba to take unnecessary risks with your money.”