London has itself to blame for Boaz Weinstein jam

Herald Investment Trust

25/03/2026 11:58

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Neil Unmack

LONDON, March 25 (Reuters Breakingviews) - Boaz Weinstein has been hunting the UK fund sector for some time now. His U.S. hedge fund Saba Capital Management holds enough power over three London-listed investment trusts that the targets may now break themselves up to avoid an uncertain fate. It could have been avoided with some governance tweaks.

Weinstein, who founded Saba in 2009, launched a spate of campaigns to boost value at British trusts. These are listed vehicles where an independent board appoints an external manager to pick investments. The 270-billion-pound ($360 billion) sector trades at a 12% discount to net asset value (NAV), making it fertile ground for arbitrageurs.

Typically, that strategy would involve pushing boards to close the discount through buybacks, and in some cases seeking to appoint directors. Saba's three current targets are Herald Investment Trust HRI.L, Impax Environmental Markets IEM.L and Edinburgh Worldwide Investment Trust EWI.L, collectively worth about 3 billion pounds. Their directors reckon Weinstein could gain control, since he already owns roughly a one-quarter to one-third of the shares.

In theory, everyone should want the same thing: a share price closer to NAV. But some directors fear Weinstein has an ulterior motive: boosting Saba's scale by managing the trusts himself, which could mean changing the investment strategy in a way that other shareholders dislike. Saba argues that it is looking to improve performance at the trusts, but has not denied an interest in managing them.

It has culminated in a scorched-earth defence. Impax and Edinburgh are offering shareholders the chance to cash out at NAV, minus the cost of liquidating assets, allowing independent investors to avoid getting stuck in a Saba-controlled vehicle. Herald has suggested the same, if its talks with Saba go nowhere. The net result could be a hasty end to the trusts, or much smaller ones with Weinstein in the driving seat, assuming he doesn't tender. Those are arguably suboptimal outcomes for all sides.

The outcry has prompted calls for reform from trust directors and market players, and the UK Financial Conduct Authority is reviewing its listing rules. One bugbear is that retail shareholders rarely vote, especially those on investment platforms, giving extra leverage to activists. Take a January meeting at Edinburgh Worldwide, where Weinstein narrowly failed in his attempt to fire the board. Turnout was 70%, including Saba's 30%, implying that many individual shareholders abstained. So even though 93% of the voting non-Saba shareholders opposed Saba and backed the board, the result was a razor-thin 53% majority favouring incumbent directors.

Arguably it would be better to have retail votes, especially those on platforms, automatically aligned with independent proxy advisers, with the chance to opt out. Another idea is to require trusts to hold votes when switching managers and contracts, with the votes of related or involved parties excluded. In that case, the threat of Saba parlaying a large stake into an investment mandate would fall away. The mess may yet prod UK regulators to act, but it could be too late for some.

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CONTEXT NEWS

Impax Environmental Markets on March 17 published details of an exit tender offer, which it says would allow shareholders to cash out at a price close to the fund's net asset value (NAV) before it is effectively taken over by Boaz Weinstein's Saba Capital Management.

Saba, a U.S. hedge fund, owns 22% of Impax and has called on it to improve performance. Weinstein's fund has said it would only be prepared to accept a tender if the fund manager, Imax, covered the costs of liquidating the assets.

“Having exhausted every reasonable alternative and having received no guidance from Saba as to its voting or tendering position, the board has been forced to act to protect non-Saba shareholders from the possibility of becoming trapped in a Saba-controlled company where Saba could have the power to change the strategy, objectives, and even the mandate,” Impax said in a statement.

“The directors will be tendering all of their own shares, underscoring our conviction that this is the right outcome for IEM’s shareholders.”

Edinburgh Worldwide Investment Trust, managed by Baillie Gifford, is also proposing a broadly similar exit tender close to NAV to combat Saba. Herald Investment Trust has said that it may adopt a similar strategy if talks with Saba fail.

London investment trusts have stopped growing https://www.reuters.com/graphics/BRV-BRV/jnvwkrrbzvw/chart.png

The trusts under attack by Weinstein have stagnated in value for a while https://www.reuters.com/graphics/BRV-BRV/gdpzamyrbvw/chart.png

(Editing by Liam Proud; Production by Shrabani Chakraborty)

((For previous columns by the author, Reuters customers can click on UNMACK/neil.unmack@thomsonreuters.com))