Herald Investment Trust (LSE:HRI) has stepped up its defence against Saba, after the US hedge fund dangled a possible cash offer in an attempt to persuade shareholders to replace the board at the UK-listed tech-focused investment company.
In an unprecedented raid on London's investment trust sector, Saba is trying to replace the boards of seven London-listed investment companies, with Herald's requisition vote the first on 22 January.
Overnight, Saba said if its nominated directors were elected at Herald they would encourage the new board to make a cash offer at 99% of current NAV.
In a statement, Saba said “These new commitments come in response to feedback from shareholders, who have suffered a minus 14.7% three-year average discount to NAV, and provide certainty regarding the plan to deliver long-overdue liquidity to all shareholders, alongside the opportunity for greater long-term returns under a new investment strategy and manager.”
Rejecting Saba's proposals, Herald's response was to highlight that since it was formed in 1994 the trust had returned 2,611% and 865% since Saba was set up.
The UK trust also noted that Saba's proposals offer an exit after at least a year with little certainty about the value of the underlying portfolio given its plans
Andrew Joy, Herald’s chairman said: "Herald has delivered strong investment performance. Since the first day of dealings (21 February 1994) the company has delivered a 27x NAV total return.
"In direct contrast to Saba's promise of the "opportunity for greater long-term returns under a new investment strategy", the Herald Board does not believe that Saba's long-term performance track record supports this.
“The Board reiterates its belief that, since Saba started investing in 2009, it has materially underperformed Herald. Since that date, Herald has delivered a NAV total return of over 865%."
Saba’s chief executive Boaz Weinstein is expected to reveal its plans for all the seven trusts it is targeting next week.
As well as Herald, the trusts involved are Keystone Positive, CQS Natural Resources, Henderson Opportunities, Edinburgh Worldwide, Baillie Gifford US Growth and European Smaller Cos.