US hedge fund Saba Capital calls on Impax board to resign

Saba is calling for the board of Impax Environmental Markets to resign, in the latest escalation in the battle between the US hedge fund and the investment trust industry. 

Saba, the largest shareholder of IEM, wants to replace Impax’s entire board with a new board of independent directors, as it did with Edinburgh Worldwide Investment Trust. 

In a letter sent to shareholders, published today, Saba said it had been ‘profoundly disappointed’ with the trust’s performance and planned to oust the existing board of Impax. 

In the letter, Saba said over the past five years the investment trust’s share price had lagged behind its benchmark by more than 75 per cent. 

On Monday, IEM revealed that investors representing just under 78 per cent of shares had taken up an offer to cash out their stake in the firm’s assets, a figure that apparently includes ‘the majority, if not all’ of Saba’s position. 

Hedge fund activist: Saba Capital Management is led by New York activist financier Boaz Weinstein

That will crystallise immediate profits for the shareholders but is likely to result in bitter recriminations over IEM’s demise, and the failure of regulators to protect it. 

In its latest letter, Saba said: ‘Against this backdrop, the scale of the shares tendered (77.83 per cent) in the recent Exit Tender Offer makes clear there is little demand for this Company to continue in its current state. 

‘In our view, any board would ordinarily step aside following this result. In light of this, we respectfully request that you resign.’ 

Saba, led by New York activist financier Boaz Weinstein, said it expects to hold 29.9 per cent of the company’s shares after the exit tender offer. 

James Carthew, head of investment company research at QuotedData, said: ‘Honestly, we are as confused as everyone else about the new Saba announcement. 

‘Today, Saba says it has a 29.9 per cent stake – more than it had before the tender – but, it appears to be saying so by press release rather than a notification to the market as it would be required to do.’ 

He added: ‘If it is true that it owns 29.9 per cent of the rump and is determined to seize control, then it will probably do so.’ 

This week, the chairman of IEM said that ‘there are no winners’ as shareholders headed for the exit. 

Glen Suarez said: ‘There are no winners here. This was an extraordinarily difficult situation to navigate, trying to balance the varied desires of all of our different shareholders.

‘The overwhelming majority of shareholders voted just a year ago in favour of IEM’s continuation, but Saba made it clear in subsequent interactions with the chair that they did not agree.

‘As a result, the board acted proactively to offer an exit to all shareholders who wished to take it.

‘The board will now carefully consider all options regarding the company’s future, and will provide a further update with the notice of AGM [annual general meeting], to be announced shortly.’

Saba has targeted a number of other investment trusts, including Edinburgh Worldwide Investment Trust (EWIT). 

EWIT has issued a rallying call to investors to fight off the hedge fund at its annual general meeting (AGM) next week.

Saba is seeking to use the trust’s AGM on 30 April to oust the EWIT board and replace them with Weinstein’s handpicked nominees.

The chairman of EWIT, Simpson-Dent, has urged shareholders to ‘make their voice heard’ to stop the fund.