Saba Pushes Tender Offer for EWIT Shareholders Post-Bid Win
Saba Capital Management, a New York-based activist hedge fund specializing in investment strategies, revealed its intention to replace the board of directors at Edinburgh Worldwide Investment Trust (EWIT) for the third occasion within just over a year. This announcement came on February 10.
Shortly afterward, the firm presented a new initiative designed to appeal directly to EWIT’s shareholders, who have previously rejected its suggestions by wide margins. In this latest move, Saba is advocating that if its nominees secure approval at the trust’s forthcoming annual general meeting (AGM), the incoming board should provide existing shareholders with a full cash redemption option valued at 99% of the trust’s net asset value (NAV).
Saba emphasized in a February 12 statement that the proposed new board would operate completely independently from the firm itself. However, it acknowledged the clear preference among shareholders for an option to exit their positions rather than commit to the company’s ongoing operations. As such, Saba is advising the newly elected directors to extend a comprehensive 100% cash tender offer to all shareholders, priced at 99% of the current NAV.
In previous shareholder votes, Saba’s initiatives faced resounding defeats. During last year’s contest, 98.4% of the votes cast—excluding those from Saba itself—opposed the proposals. This year’s equivalent figure stood at 92.7%, underscoring persistent resistance from the investor base.
Saba continues to argue that EWIT has repeatedly lagged behind key stock market benchmarks in terms of returns. The hedge fund has specifically criticized the handling of a potential sale of the trust’s primary asset, Elon Musk’s SpaceX, alleging it was deliberately undermined to pave the way for a combination with another Baillie Gifford-managed vehicle, Baillie Gifford US Growth. Despite these contentions, Saba has yet to sway the majority of EWIT’s shareholders to its viewpoint.
EWIT’s management responded firmly to Saba’s push for another vote. A trust spokesperson highlighted that only three weeks prior, an unprecedented 70% of shareholders had participated in the second poll within a single year. Of those independent votes, a staggering 93% rejected Saba’s plans outright. The spokesperson expressed frustration that, despite such clear and decisive shareholder sentiment against Saba assuming control, the activist investor appears unwilling to heed the message.
Shareholders in EWIT seem hesitant to maintain their stakes in a fund that might shift its investment approach under the slate of directors Saba is nominating, namely Gabriel Gliksberg, Michael Joseph, and Jassen Trenkow. This uncertainty could be fueling demands for liquidity options.
Potential Expansion of Saba’s Activist Campaigns to Other Trusts
Although Saba’s current campaign is centered on EWIT, the hedge fund holds significant positions in various other UK-listed investment trusts. This has sparked discussions about whether additional activist interventions might soon emerge across the sector.
In response to Saba’s growing influence, at least two other trusts have proactively sought to neutralize potential challenges by proposing tender offers to their shareholders, priced near NAV levels. Saba dismissed one such overture from Herald Investment Trust, leading to its withdrawal on February 3. Currently, Herald’s board is negotiating with Saba on a mutually acceptable exit mechanism for the hedge fund’s stake. Should talks fail, the board plans to implement a modified tender offer featuring a reduced approval threshold, preventing Saba from blocking it unilaterally.
Meanwhile, shareholders of Impax Environmental Markets are scheduled to vote on a similar tender proposal during a general meeting set for February 23. These developments illustrate how investment trusts are adapting to the pressures exerted by activist investors like Saba, potentially reshaping governance and liquidity provisions in the closed-end fund landscape.
