A New York hedge fund has won a decisive victory over one of Britain’s leading investment trusts after a long battle.
Saba Capital Management, run by financier Boaz Weinstein, effectively seized control of Edinburgh Worldwide yesterday in what was labelled a ‘rude awakening’ for the industry.
Shareholders in the trust, whose biggest holding is a stake in SpaceX, backed Weinstein’s plan to oust the board and install three Saba-backed nominees as directors.
It was Weinstein’s third attempt to unseat the board after his first two failed.
The vote – led by Saba, which has a 25 per cent stake – brought to an end the tenure of chairman Jonathan Simpson-Dent and four other directors.
It hands Saba control of the trust ahead of the proposed stock market listing of Elon Musk’s SpaceX, which looks set to be valued at £1.3trillion.
Takeover: Saba, run by Boaz Weinstein (pictured), effectively seized control of Edinburgh Worldwide in what was described as a ‘rude awakening’ for the industry
It marks a significant victory for Weinstein, who has also targeted a number of London-listed investment trusts.
Danni Hewson, at broker AJ Bell, said it was a ‘rude awakening’ that will ‘create consternation in the boardrooms of other investment trusts’.
She added: ‘The timing of Saba’s victory is lent extra sensitivity by the looming market lift-off for Edinburgh Worldwide’s biggest holding – SpaceX.
‘Saba’s plan seems to be to liquidate this stake and turn the trust into a vehicle for investing in other undervalued UK investment trusts.’
Simpson-Dent said: ‘This is a disappointing day for our long-standing shareholders. Retail and private wealth shareholders have been ground down by Saba’s repeated attacks.
‘A significant number have already chosen to exit the company, replaced by institutions seeking to capture the upside potential in Edinburgh Worldwide’s substantial SpaceX exposure.
‘I expect many more retail and private wealth shareholders to follow. This should represent a wake-up call for the investment trust sector and its regulators.’
Richard Stone, chief of the Association of Investment Companies, said: ‘The bigger picture here is that a minority shareholder has been able to control the future direction of a trust against the wishes of the vast majority of other investors.’