Saba’s boss says the coup on investment confidence will revive the UK market
- Hedge fund CEO says Britain ‘desperately needs’ Saba as investors avoid the market
The hedge fund behind a planned takeover of seven London-listed investment funds has unveiled plans for a new strategy it says will help revive the entire sector.
Saba Capital is trying to overhaul the boards of seven trusts in which it has built up substantial interests and impose itself as an investment manager.
The company’s CEO Boaz Weinstein told investors on Tuesday that, if investors supported the plans in a series of crunch votes, Saba would merge all or part of the seven funds into a new London-listed vehicle.
The fund would buy up interests in other investment funds at significant discounts on the net asset value.
If the merged vehicle included all seven trusts, it would have an estimated net asset value of £3.9 billion, with just 16.5 percent invested in UK assets at inception.
Saba says it aims to grow this share to 100 percent of the trust’s portfolio.
Boaz Weinstein, CEO of Saba Capital, said the group’s intervention will boost the wider UK investment trust market
Weinstein told investors on Tuesday: ‘If we get the chance, we will launch this Saba product that I think Britain desperately needs, given that every (financial) institution has been a seller of British assets.
‘The fund will benefit from the scale… (and) we’re going to put that money back into Britain. We are the white knight of the British market. Everyone is a salesperson. We are a buyer.
“This is a huge amount of ammunition for us to buy up all the beleaguered funds and help them rise in price.”
Saba also plans to partner with the investment funds in which it has interests through the new vehicle, encouraging them to take advantage of ‘shareholder-friendly’ actions, such as share buybacks, to further limit discounts .
Weinstein said the new vehicle would also “help the UK market create new investment funds” because “if they don’t get a discount, the manager often offers a secondary offering, or comes up with a new product.”
Saba has accused the seven respective boards and management of insufficiently addressing performance-related issues and persistent discounts to net asset value.
It will put its proposals to shareholders in a series of votes scheduled from January 22 to February 5.
The trusts’ boards have urged shareholders to reject Saba’s “opportunistic” approach and accuse the hedge fund of self-interest at the expense of other investors.
Executives have also pointed to the relatively high fees of Saba’s funds, suggesting that investors could face similar costs if the hedge fund gets its way, and accused the company of cherry picking data to alter perceptions of the distort performance.
They further point out that performance has recently improved and discounts have decreased significantly. Saba, in turn, points to its own investments as the main driver of smaller discounts.
Saba will submit its proposals to shareholders in a series of crunch votes
The wider UK investment sector has also joined in, with analysts from Investec, Frostrow Capital and Evlyn Partners among the companies urging investors to back their current boards.
Meanwhile, Peel Hunt analysts have said there are around 17 London-listed investment funds in which Saba has built up stakes that could be vulnerable to similar turmoil.
Broker Frostrow warned shareholders: ‘Saba wants to defraud you by using an opportunistic moment to intervene and take you out.’
Saba, which says it will provide investors with significant liquidity if they want to sell, believes it has already had a positive impact on UK investors and the market.
‘My prediction is that many of the funds that Saba owns will announce shareholder-friendly moves over the next three months that will make you hundreds of millions of pounds extra that you wouldn’t have otherwise made, because they want to deter us from going through.
‘The entire UK closed-ended fund space will see smaller discounts overall, especially if we win and we have the firepower to buy up UK funds.’
DIY INVESTMENT PLATFORMS
A.J. Bell
A.J. Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund trading and investment ideas
interactive investor
interactive investor
Invest for a fixed amount from € 4.99 per month
Sax
Sax
Get £200 back in trading fees
Trade 212
Trade 212
Free trading and no account fees
Affiliate links: If you purchase a product, This is Money may earn a commission. These deals have been chosen by our editors because we believe they are worth highlighting. This does not affect our editorial independence.