Saba Capital rejected an offer from Baillie Gifford US Growth Trust that would have allowed Boaz Weinstein’s activist hedge fund to exit its investment at close to net asset value, according to a report by The Times.
The New York-based hedge fund owns about 29% of Baillie Gifford US Growth and is seeking to install three nominees – Jason Chen, Thomas McGlade and James Waterlow – on the trust’s board.
Saba has argued that shareholders have been disadvantaged by the way the trust has been managed and has accused its incumbent directors of prioritising the interests of Baillie Gifford, the investment manager.
Baillie Gifford is expected to set out its response to Saba’s campaign in documents being published this week. Central to its defence will be the claim that Saba was offered an opportunity to sell its stake for cash at 99.75% of net asset value through a tender offer that would have been available to all shareholders.
The report cites unnamed people familiar with the matter as saying that Saba declined to participate despite having previously highlighted liquidity as an issue for investment-trust shareholders.
The trust is also expected to argue that appointing Saba-backed directors would undermine the independence of its board.
The confrontation is the latest stage in Saba’s broader campaign targeting UK-listed investment trusts, where the hedge fund has pushed boards to tackle persistent discounts between share prices and the underlying value of their assets.
Saba has built substantial positions in a number of UK investment companies and has sought board changes at several of them, arguing that shareholders could benefit from measures designed to narrow or eliminate those discounts.
The campaign secured a significant victory in April when Saba succeeded in removing the board of Edinburgh Worldwide Investment Trust, another Baillie Gifford-managed vehicle. The trust has exposure to private companies including SpaceX.
Baillie Gifford US Growth reportedly declined to comment, while Saba was reportedly approached for a response.
