BlackRock agrees deal with Saba to protect its trusts from coup chaos
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BlackRock has reached an agreement with activist hedge fund Saba Capital which it hopes will protect its London-listed investment trust from the disruption faced by peers. It comes as Herald Investment Trust shareholders face a vote over the company's future later today, amid Saba's plans to overhaul and seize the boards and management of seven London-listed funds.
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In four separate but near-identical statements published on Wednesday, BlackRock told Energy and Resources Income, American Income, Smaller Companies and World Mining investors that it had secured assurances from Saba it would not target the funds in a similar way.
Saba has been building stakes in UK trusts sitting on high discounts to net asset value. The hedge fund, which critics accuse of 'self interest' and a cynical exploitation of low voter turnout, says it plans to merge 'some or all' seven investment trusts should it get its way in each vote.
It will then build a portfolio made up of other London-listed investment trusts, which Saba says it will engage with to narrow discounts. BlackRock moves to protect London-listed hedge funds from Saba activism. BlackRock Smaller Companies was one of 21 London-listed investment trusts highlighted by broker Peel Hunt as being potentially vulnerable to the Saba takeover attempt, with the hedge fund having taken a notable stake in the company.
