Investment trusts have been, for decades, an unsung boon to private savers.
They have given ordinary small investors a way in to some of the most exciting and potentially lucrative innovations of their day, from railroads in the 19th century to AI now, even with only small sums.
Trusts are the epitome of long-termism, an approach well-suited to those saving for retirement.
These strengths may have been underappreciated on home turf, but have not escaped US predator Boaz Weinstein who, via his vehicle Saba Capital, has been waging a war of attrition against trust boards.
His aim is to take control of trusts he has targeted at a bargain price, regardless of the wishes of the other shareholders, who are overwhelmingly opposed.
He has been rebuffed but will not give up, and his refusal to accept defeat has plunged trusts such as Edinburgh Worldwide into a state of long-running siege.
Ruthless: US predator Boaz Weinstein has been waging a war of attrition against trust boards via his vehicle Saba Capital
At Edinburgh, he has called a vote to remove the directors and replace them with his own candidates, less than two weeks after a previous effort hit the rocks.
Weinstein is relying on investor fatigue to get his way. His approach is to wear down opposing shareholders until they finally capitulate. This is not acceptable.
As I recently wrote in these pages, City regulators and the Government must not sit idly by while private investors’ interests are trampled so cynically.
The Association of Investment Companies has written to the City watchdog, the Financial Conduct Authority, and to the Department for Business and Trade calling for action to protect retail shareholders.
Saba has woken up a sometimes complacent sector. Private investors have mobilised to defend their trusts.
But it is unfair that trusts have to keep on achieving record turnouts to prevent Saba taking control against the desires of the vast majority of independent shareholders.
Carpet-baggers such as Weinstein should not be permitted to force repeated votes on basically the same proposals. Regulators need to impose a limit.
One strike and you’re out for a year, two strikes and you’re out for good, seems reasonable to me. To combat apathy, there should be rule changes to permit small investors who hold shares through platforms to vote by default with the board.
Related-party transaction rules could also be used to block Saba from installing its own Trojan Horse directors onto trust boards with carte blanche to change the managers and the strategy of the trust to their own advantage.
Saba is making a mockery of shareholder democracy and treating savers with contempt. Enough is enough.
They’re back!
Simon Peckham and his crew, who were among the City’s most prolific dealmakers with their former company Melrose, are back on the takeover trail with their newish venture, Rosebank.
Peckham has his sights on two businesses owned by private equity firm American Securities.
At Melrose, Peckham and his cohorts generated a total shareholder return of nearly 3400 per cent for their backers from their float in 2003 until the group was broken up a couple of years ago.
The strategy deployed was a private equity-style formula of ‘buy, improve, sell,’ undertaken on the public markets.
Peckham now believes he can do it all over again, and on the much-maligned London stock market to boot.
His decision to float Rosebank in London rather than to go the private equity route or list in New York is in itself a vote of confidence in the UK.
It is also refreshing to see a British company embark on US takeovers, when so much of the tide is in the opposite direction.
So can he recreate his glory days?
These acquisitions are from a private equity owner, as was Rosebank’s first purchase last year when it bought Electrical Components International from Cerberus Capital Management for more than £1.5billion.
This raises the question of how much more value Rosebank can extract from assets that have already been given the private-equity treatment.
Peckham does, however, have a track record at Melrose of doing precisely that.
The takeover of grand old British engineer GKN in 2018 was controversial and Dowlais, the automotive arm spun off out of Melrose, is now owned by US firm American Axle.
But it would be foolish to dismiss any team with a record like Rosebank’s. And when Peckham says his aim is to make a lot of profit in the UK and pay a lot of tax here to fund the NHS, one can only applaud.
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