A long-running standoff between an activist investor and one of Britain’s best-known technology investment trusts has been resolved through a sweeping deal with Aberdeen Group PLC (LSE:ABDN) that reshapes control of the fund and potentially eight others.
Saba Capital, the largest shareholder in Herald Investment Trust (LSE:HRI), has agreed to back a tender offer for up to 66% of the trust’s shares, allowing investors to exit at close to net asset value.
The US hedge fund said the agreement “has delivered a landmark outcome” for shareholders.
Also today, Aberdeen Investments announced that it is set to take over management of the trust later this year, with Herald’s long-standing manager Katie Potts and her team expected to join the firm.
Ahead of this, Saba has signed a three-year standstill agreement, pledging not to vote against the trust’s board at shareholder meetings.
The arrangement could extend beyond Herald, with up to eight other Aberdeen-managed investment trusts, representing around £12.5 billion of assets, given the option to adopt similar protections.
Investment trusts generally have independent boards, and each of these will need to decide whether or not to agree to such a deal.
If so, it would seem to significantly lower tensions that have hung over the trust sector, where Saba and other activist investors have increasingly pushed for change.
Christian Pittard, head of closed end funds and corporate finance chief at Aberdeen, thanked Saba, saying the US firm "deserves special mention for working constructively and creatively to end the impasse".
"Saba's collaboration and determination to find a path forward that benefited all shareholders ultimately made it possible to preserve this trust and, together, deliver an outcome that is positive for everyone."
He said the deal to take over Herald's management "will not only preserve the future of one of Britain's best known investment trusts, but also allow Herald's team to keep doing what they do best as part of Aberdeen's growing closed end funds stable".