‘The entire UK closed-ended fund space in general will see smaller discounts, especially if we win and we have this dry powder firepower to buy up UK funds.’
Weinstein said the new vehicle would also ‘help the UK market create new investment trusts’, because ‘when they’re not at a discount the manager often offers a secondary offering, or comes up with a new product’.
They further point to the fact that performance has recently improved and discounts have narrowed significantly. Saba, for its part, highlights its own investment as being the major driver of narrower discounts.
Should the merged vehicle encompass all seven trusts, it would have an estimated net asset value of £3.9billion, with just 16.5 per cent invested in UK assets at inception.
Broker Frostrow warned shareholders: ‘Saba are looking to rip you off by using an opportunistic moment in time to muscle in, and you out.’
Directors have also highlighted the relatively high fees of Saba’s funds, suggesting investors could face similar charges should the hedge fund get its way, and accused the firm of ‘cherry picking’ data in order to distort perception of performance.
Saba also plans to engage with the investment trusts it holds stakes in via the new vehicle by encouraging them to use ‘shareholder friendly’ actions like share buybacks to help narrow discounts further.
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Saba has accused the seven respective boards and management of failing to sufficiently tackle performance-related issues and persistent discounts to net asset value.
Saba will take its proposals to shareholders in a series of crunch votes
Meanwhile analysts at Peel Hunt have said there are around 17 London-listed investment trusts Saba has built stakes in that could be vulnerable to similar upheaval.
The hedge fund behind a planned takeover of seven London-listed investment trusts has revealed plans for a new strategy it claims will help revitalise the entire sector.
Saba Capital chief executive Boaz Weinstein said the group’s intervention will boost the wider UK investment trust market
‘The fund will benefit from scale…and we’re going to put that money back into the UK. We are the white knight of the UK market. Everyone is a seller. We’re a buyer.
