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ISS gives partial support to BlackRock in battle with activist Saba

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BlackRock has received partial support from influential proxy adviser Institutional Shareholder Services while activist hedge fund Saba Capital Management attempts to remove the investment giant, as the manager of two closed-end funds totalling approximately $2bn in assets.

The report cites documents released late Monday as revealing that ISS has recommended that shareholders of the California Municipal Income Trust and the BlackRock Science and Technology Term Trust reject Saba’s proposals to terminate BlackRock as investment adviser.

However, ISS is supporting Saba’s board nominees for these two funds, citing concerns over their governance structures.

Shareholders of BlackRock’s closed-end funds are set to vote on Saba’s proposals, which include new board members at six funds, next week.

On Tuesday, another proxy adviser, Glass Lewis, recommended that shareholders support all of BlackRock’s nominees for three of the six funds while also urging them to retain BlackRock as the manager.

Saba, led by Boaz Weinstein, has a history of purchasing closed-end funds at substantial discounts and pressuring managers to close the valuation gap through various measures. BlackRock has countered Saba’s claims of mismanagement, asserting that the hedge fund’s actions are self-serving.

Saba is aiming to force boardroom changes at ten BlackRock funds in total, arguing that its nominees will enhance financial returns by narrowing the gap between market price and net asset value.

In response to Saba’s pressure, BlackRock recently announced plans to waive some management fees and increase distributions at certain closed-end funds.

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