Aberdeen inks deal to handle Herald impasse in battle with US raider Saba Capital

Embattled investment trust Herald has been saved from a US raider by being brought under the wing of fund manager Aberdeen.

FTSE 250 fund Herald, which invests in technology firms and is worth £1.4billion, has been besieged by Saba Capital, a hedge fund run by Wall Street financier Boaz Weinstein.

Saba attempted to unseat the board and replace it with its own nominees last year, but was defeated following overwhelming opposition from other shareholders.

Since then, Weinstein has continued his assault. In February, Saba blocked an offer that would have allowed investors to cash out their shares.

But both sides claimed victory yesterday when a deal was announced for Aberdeen to be fund manager.

Crucially for many Herald investors, the trust’s star stock-picker Katie Potts, who has led it since its inception, remains in place. 

Under the agreement, Saba will be able to cash out its entire stake in the trust, which sits at around 30 per cent. 

The hedge fund has also agreed not to try to replace the board or vote against it for at least three years.

‘I am delighted that agreement has been reached for Herald Investment Trust to continue with its successful investment mandate, and end the impasse between different groups of its shareholders,’ said the Herald chairman Andrew Joy.

Weinstein, who has targeted several other London-listed investment trusts, said the deal offered shareholders ‘a real choice’ and marked ‘six successful outcomes from our seven original UK campaigns’. ,

‘This is what shareholder engagement looks like when boards act in the interests of the people they serve,’ he said, adding that Saba would ‘keep demanding’ similar actions across the sector.

But some analysts said the deal seemed more like both sides had agreed after failing to defeat the other.

‘It still feels like a compromise,’ said AJ Bell head of markets Dan Coatsworth.

‘The industry has been tearing its hair out over the activist’s meddling and might think the outcome is the blueprint to follow if it means Saba can eventually go away.’ 

Saba won a victory last week at Edinburgh Worldwide when Weinstein seized control of a trust with a stake in Elon Musk’s SpaceX, after investors backed ousting the board and replacing them with his nominees.