REG - Herald Inv Trust PLC - Proposed Tender Offer

Herald Investment TrustAnnouncement

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RNS Number : 2500O  Herald Investment Trust PLC  09 January 2026

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION (EU) NO 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED ("UK MAR"). ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN OR INTO, CANADA, JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH
AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO MAY RESULT IN THE
CONTRAVENTION OF ANY REGISTRATION OR OTHER LEGAL REQUIREMENT OF SUCH
JURISDICTION OR OF THE UK.

This announcement is not an offer to sell, or a solicitation of an offer to
acquire, securities in any jurisdiction in which the same would be unlawful.
Neither this announcement nor any part of it shall form the basis of or be
relied on in connection with or act as an inducement to enter into any
contract or commitment whatsoever.

 

9 January 2026

 

 

For immediate release

 

HERALD INVESTMENT TRUST PLC

(the "Company" or "Herald")

 

Proposed Tender Offer for shareholders to sell up to 100% of their shares

 

Andrew Joy, Chairman of Herald Investment Trust plc, commented

 

"The Board is taking decisive action today to initiate a full and fair choice
for shareholders to continue with the current manager and mandate or to
receive cash at close to net asset value. The Board has assessed that it is
not sustainable to do nothing given that a process of attrition
may eventually see Saba able to win a simple majority vote even though it
itself is a minority shareholder. Accordingly, the Board has carefully
considered a wide range of options, including during lengthy discussions with
Saba.

 

The Board has concluded that the best available alternative is to put forward
proposals for a Tender Offer, which will provide shareholders with the
opportunity to realise up to 100% of their shares for cash at close to net
asset value through a realisation pool mechanism. This proposal will enable
long-term shareholders to remain invested with the current successful manager
and mandate they have chosen, while also providing a full exit route to
short-term shareholders.

 

Should Saba block the Tender Offer, which they can given they own more than
25% of the Company, the Board will launch a further tender offer (the
"Backstop Tender Offer") on terms which cannot be blocked by Saba alone. The
Backstop Tender Offer would, if approved, ensure shareholders can at least
receive cash rather than automatically remaining in a vehicle which is likely
to become effectively controlled by Saba, an outcome shareholders have already
voted against twice in the last year.

 

Herald Investment Management Limited led by Katie Potts has an outstanding
long-term investment track record, with Herald delivering a NAV total return
of 2,956% since inception, and the Company has continued to perform strongly
delivering a NAV total return of 31% over the last three years. Herald has
outperformed the Saba Capital Master Fund over 1, 3, 5, 10 years and over the
period since Saba's inception. For comparison, since the inception of the
Saba Capital Master Fund strategy in April 2009 it has returned 151%. In
contrast, Herald has returned 907% over the same period.((1))

 

Shareholders are being asked to approve the Tender Offer and decide whether
they wish to tender their shares. Through the Tender Offer, the Board aims to
restructure the shareholder base, allowing Herald to focus on its proven
investment approach and future growth. The Tender Offer is conditional on Saba
tendering all (or materially all) of its holding. We urge all shareholders,
including Saba, to vote in favour of the proposals. My fellow directors and I
have each confirmed that we do not intend to tender our shares in the Tender
Offer, but will in the Backstop Tender Offer should the first Tender Offer be
blocked by Saba."

 

Highlights

 

·      The Board and the Company's manager continue to have confidence
in the Company's strategy, believing there to be attractive long-term
investment opportunities within quoted smaller companies in the global
technology and communications sectors.

·      The Board intends to offer all eligible shareholders, including
Saba, the option to sell up to 100% of their shares pursuant to the Tender
Offer.

·      The Board believes the Tender Offer will, if implemented, enable
the Company to focus on delivering strong investment returns with a supportive
and stable shareholder base.

·      At the same time, the Tender Offer will make the Company more
attractive to new investors and provide a fair exit opportunity for short-term
shareholders.

·      None of the directors or the Company's manager intend to tender
their own shares pursuant to the Tender Offer.

·      Unless shareholders actively take steps to participate in the
Tender Offer (in accordance with the procedures to be set out in the
circular), none of their shares will be tendered and their investment in the
Company will continue.

·      The tender price will be based on the pro rata realised value of
the Tender Pool created following receipt of all valid elections for the
Tender Offer (from which all of the costs associated with making the Tender
Offer will be deducted).

·      Shareholders remaining invested in the Company will not bear any
of the costs of the Tender Offer, assuming it proceeds.

·      The Tender Offer is conditional upon, amongst other things, Saba
tendering all (or materially all) of its shares, amounting to a holding of
approximately 30.7%.

 

The Tender Offer is also conditional upon, amongst other things, shareholder
approval. The Board urges all shareholders to vote in favour of the Tender
Offer at the General Meeting in due course. Details of the General Meeting
will be provided in a circular to be published in the near future.

 

Introduction

 

The Board of Herald Investment Trust plc (the "Company" or "Herald") announces
that it intends to put forward proposals for the Company to offer eligible
shareholders a cash exit by way of a tender offer for up to 100% of their
shares in the Company (the "Tender Offer").

 

The Board is also setting out contingency plans should the Tender Offer not
proceed. If Saba chooses not to support the Tender Offer or declines to tender
its holding, the Tender Offer will not be able to proceed and the Board will
propose an alternative tender offer (the "Backstop Tender Offer"), which will
require a lower shareholder approval threshold and could therefore be
implemented without Saba's support. The purpose of the Backstop Tender Offer
is to ensure that shareholders have the opportunity to exit close to net asset
value, at a time before Saba might gain control of the Board or the management
of the Company.

 

Background to and reasons for the Tender Offer

 

On 18 December 2024, Saba Capital Management L.P. ("Saba", including funds,
accounts and investment vehicles managed, advised or sub-advised by Saba or
any of its affiliates where applicable), acting through its nominee,
requisitioned a general meeting of the Company at which it sought to remove
the Board and replace it with its own proposed directors (the "Requisitioned
General Meeting"), with the aim of changing the Company's strategy and
appointing itself as investment manager, thereby increasing Saba's assets
under management. This attempt to take control of the Board was firmly
rejected by shareholders at the Requisitioned General Meeting held on 22
January 2025, with only 0.15% of non-Saba votes cast in favour of Saba's
proposals.((2))

 

At the Company's annual general meeting held on 24 March 2025, Saba voted
against the continuation of the Company and the re-election of the directors.
Once again, non-Saba shareholders, following the Board's recommendations,
almost unanimously voted the opposite way to Saba. Both attempts to oust the
Board were therefore resoundingly defeated.

 

The Board wishes to serve the interests of all shareholders, while recognising
that differing groups of shareholders have very different objectives for their
investments. This disparity, and apparent lack of alignment in shareholders'
investment horizons, has proven disruptive for the Company's manager, which
feels inhibited in committing to new long-term investments with promising
technology and communications companies, particularly given the relative
illiquidity of smaller quoted companies' shares. These challenges within the
Company's shareholder base are also an obstacle to attracting new
shareholders.

 

If the Board does not act, there is a real risk that Saba may succeed at a
future vote in changing the Board and taking effective control of the Company.
Although Saba might seek to appoint directors who are nominally independent,
the Board believes that Saba continues to aspire to take effective control of
the Company and its assets under management, with the risk of leaving other
shareholders stranded in a company with a different manager and strategy that
they did not choose to invest in. The outcomes of the two previous meetings,
as well as recent discussions with the larger non-Saba shareholders,
demonstrate that the wider shareholder base remains resolutely opposed to
being in a Saba-controlled and managed vehicle. In light of this, the Board
has concluded that it must act now to ensure a fair outcome for all
shareholders.

 

The Board has reviewed a wide range of possible options, bearing in mind that
Saba, with more than 25% of the Company's shares, can block any proposal
requiring a special resolution where a 75% majority is needed (such as a
scheme of reconstruction or a members' voluntary liquidation). These options
have included constructive discussions with Saba, where the Board has sought
to reconcile Saba's continuing ambition to take effective control of Herald
with its understanding that non-Saba shareholders would generally prefer to
continue being invested with the current manager and mandate but, if they
cannot, to have the opportunity to realise their shareholding at close to net
asset value ("NAV").

 

After thorough consideration, the Board has reluctantly concluded that it is
not possible to reconcile the objectives of Saba with those of the remainder
of the shareholder base. As a result, the Board is launching the Tender Offer,
providing Saba and any shareholder who wishes to realise their investment the
opportunity to do so, while also enabling those non-Saba shareholders who wish
to remain with the current manager and mandate to continue their investment.

 

The Board continues to believe that there are attractive long-term investment
opportunities within quoted smaller companies, in particular those companies
in the areas of technology and communications. The manager believes that many
smaller companies are currently attractively valued and often have fewer
professional investors considering them for investment. Some investors are
forced sellers reflecting net redemptions from funds that invest in smaller
companies in a number of jurisdictions. The technology sector is undergoing a
dynamic period, driven in part by rapid advances in artificial intelligence
and large investments in cybersecurity and defence due to geopolitical
tensions. This tailwind has helped drive the Company's strong performance,
with Herald delivering a NAV total return of 2,956% since inception. The
Company has continued to perform strongly, delivering a NAV total return of
31% over the last three years, and a NAV total return of 8.6% over the twelve
months to 31 December 2025.

 

The Board notes that Herald's performance has been superior to that of the
Saba Capital Master Fund over each of the relevant periods set out below. The
Saba Capital Master Fund, with $1.9bn under management, is believed to be
Saba's longest established fund, holds shareholdings in nearly all the UK
listed investment trusts in which Saba has a meaningful stake and is believed
to be the biggest Saba holder of Herald shares. For comparison, since the Saba
Capital Master Fund's inception in April 2009 it has returned a total return
of 151%((1)). In contrast, Herald has returned a NAV total return of 907% over
the same period.

 

 Performance since                                            Herald NAV Total Return     Saba Capital Master Fund

                                                              (£, to 21 November 2025)    (£, to 21 November 2025)
 January 2025                                                 5.2%                        (10.6)%
 January 2023                                                 24.6%                       (26.1)%
 January 2021                                                 14.5%                       0.8%
 January 2016                                                 196.8%                      106.0%
 April 2009 (inception of Saba Capital Master Fund strategy)  907.3%                      150.9%

Note: All performance, which is on a like for like basis, measured until 21
November 2025, which is the latest date for which information is available for
the Saba Capital Master Fund. For clarity the Herald NAV total return in the
twelve months to 31 December 2025 was 8.6%. Return for Saba Capital Master
Fund, which is USD denominated, is converted into GBP equivalent return.((1))

 

The Tender Offer will provide eligible shareholders who wish to exit with the
opportunity to do so. Accordingly, the Board urges all shareholders,
particularly Saba, to vote in favour of the proposed Tender Offer, thereby
allowing all shareholders the choice of remaining with the current mandate and
manager or realising their investment at close to NAV. To prevent the Company
from inadvertently falling under Saba's control, the Tender Offer is
conditional upon Saba (or accounts through which Saba holds an economic
interest) validly electing to tender all (or materially all) of their
shareholdings in the Company.

 

Tender Offer summary

·      Eligible shareholders, including Saba, will be able to tender up
to 100% of their shares in the Company.

·      Following receipt of all valid elections for the Tender Offer,
and if the resolution to approve the Tender Offer is passed at the General
Meeting and the Tender Offer is not otherwise terminated, the Company will
notionally allocate its assets and liabilities between two pools as follows:

o  a pool of investments, cash, other assets and liabilities attributable to
the shares that are validly tendered pursuant to the Tender Offer (the "Tender
Pool"); and

o  a pool of investments, cash, other assets and liabilities attributable to
the shares that are not tendered (the "Continuation Pool").

·      A pro rata portion of the Company's assets and liabilities will
be allocated to the Tender Pool corresponding to the proportion of shares
validly tendered. The balance of the Company's assets and liabilities will be
allocated to the Continuation Pool. As far as practicable, all holdings
within the Company's portfolio will be split between the Tender Pool and the
Continuation Pool in proportion to the Shares validly tendered or not
tendered respectively.

·      The Tender Pool will be realised for cash in a disciplined manner
in order to maximise value for exiting shareholders.

·      The tender price at which validly tendered shares will be sold by
eligible shareholders under the Tender Offer will be based on the pro rata
realised value of the Tender Pool (from which all of the costs associated with
making the Tender Offer will be deducted).

·      Accordingly, shareholders remaining invested in the Company will
not bear any of the costs of the Tender Offer (assuming it proceeds). Further
detail on the Tender Offer will be provided in a circular which is expected to
be published in the near future.

Conditions for the Tender Offer

 

The Tender Offer will be conditional upon, amongst other things, shareholder
approval by way of a special resolution, which will be sought at a general
meeting of the Company (the "General Meeting").

 

In order for the Tender Offer to proceed, at least 75% of votes cast at the
General Meeting will be required to be in favour of the resolution to approve
the Tender Offer. So that control does not pass to a single shareholder and so
that the interests of shareholders can be protected, the Tender Offer will
also be conditional on Saba (or accounts through which Saba holds an economic
interest) validly electing to tender all (or materially all) of their
shareholdings in the Company. Saba has currently indicated that they will not
support the Tender Offer. However, the Board believes all shareholders should
have the opportunity to express their support for the Tender Offer, which the
Board sees as the best solution for the Company and shareholders as a whole,
and the Board will endeavour to persuade Saba to support the Tender Offer
before it closes.

 

Expected timetable for the Tender Offer

 

It is expected that a circular to shareholders will be published in the near
future which will give further details of the Tender Offer as well as
containing notice of a general meeting. It is expected that the Tender Offer
will be open from the date the circular is published until mid-February 2026.
The General Meeting is expected to be held in early February 2026.

 

Post Tender Offer

 

Assuming the Tender Offer proceeds, the Board will review, in the light of the
take up of the Tender Offer, how the Company can best continue serving the
shareholders who have chosen to remain invested.

 

The Backstop Tender Offer

 

The Tender Offer requires a special resolution and, consequently, Saba could
choose to block the Tender Offer, which is within their power given they own
more than 25% of Herald shares. The Board believes that if Saba does not elect
for the Tender Offer or votes against the resolution(s) at the General Meeting
it is clear that Saba intends to take control of the Company for its own
economic benefit. The Board notes Saba's precedent requisitions to remove the
independent boards of numerous investment trusts and take control through
Saba-nominated directors, including its most recent requisition in November
2025. The Board believes that Saba's intentions have not changed.

 

Should the Tender Offer not proceed, the Board will put forward proposals for
the Backstop Tender Offer that would provide eligible shareholders with an
opportunity to exit their investment in Herald at a time before Saba might
gain control of the Board or the management of the Company.

 

The Board notes that company law permits a tender offer to be launched and
decided by a simple majority vote. While typical corporate governance
guidelines advocate a 75% approval threshold, to protect shareholders'
interests from a minority shareholder pushing through a vote when others do
not participate, the current situation is very different. In this instance, in
order to safeguard the interests of the majority of shareholders, it is
necessary to rely on the law, which provides for and permits a >50%
approval threshold. If there were a 75% threshold as per corporate governance
guidelines, Saba, as a c.30% shareholder, would be able to block what the
Board believes to be the fairest outcome in the circumstances, which is for
all shareholders to have the option of exiting close to NAV prior to a
potential change of Board, manager and mandate. The Board believes that if
Saba gains control of Herald, it is unclear if there will be a full
unrestricted cash exit offered on similar terms to the Backstop Tender Offer.
Therefore, in order to protect shareholders, the Board believes that it is
necessary to follow company law rather than governance guidelines in these
specific circumstances.

 

If the Backstop Tender Offer proceeds, eligible shareholders would be able to
tender up to 100% of their holding and, following receipt of all valid
elections for the Backstop Tender Offer a tender pool would be created by
allocating a pro rata portion of the Company's assets and liabilities
corresponding to the proportion of shares validly tendered. The tender price
at which validly tendered shares would be sold by eligible shareholders under
the Backstop Tender Offer would also be based on the pro rata realised value
of the tender pool (from which all of the costs associated with making the
Backstop Tender Offer will be deducted). As the Board expects that there would
be very significant elections for the Backstop Tender Offer if it were to
proceed, the Board currently anticipates that the assets allocated to the
tender pool for the Backstop Tender Offer would comprise the Company's most
liquid and readily realisable holdings, with the Company's most illiquid
holdings remaining with those electing to remain invested.

 

No action is required to be taken by shareholders in respect of the Backstop
Tender Offer at this time. If the Tender Offer does not proceed, a separate
circular will be issued in respect of the Backstop Tender Offer in due course.

 

Conditions for the Backstop Tender Offer

 

The Backstop Tender Offer would be conditional on shareholder approval by way
of an ordinary resolution, which would be sought at a general meeting of the
Company in due course. In order for the Backstop Tender Offer to proceed, over
50% of votes cast on the resolution at that general meeting would be required
to be voted in favour.

 

The Backstop Tender Offer would not be conditional on Saba supporting the
tender or tendering its shares. If Saba chooses not to tender its shares, the
Board believes that it is likely that Saba would retain ownership of shares
that would, following the completion of the repurchase and cancellation of the
shares validly tendered for the Backstop Tender Offer, represent over 50% of
the Company's issued share capital.

 

Conclusion

 

The Board urges Saba to permit shareholders a choice between continuing with
the current manager and mandate or receiving cash at close to NAV. The Tender
Offer being proposed is necessary to achieve that choice for all shareholders.
The Backstop Tender Offer only becomes necessary if Saba blocks the first
Tender Offer. The first Tender Offer remains the Board's strongly preferred
course of action.

 

 

Enquiries:

 

 Herald Investment Trust plc                               via Camarco
 Andrew Joy (Chairman)

 Camarco (Media enquiries)                                 +44 (0)20 3757 4980
 Billy Clegg / Ben Woodford / Elfie Kent                   Herald@camarco.co.uk (mailto:Herald@camarco.co.uk)

 J.P. Morgan Cazenove (Financial Adviser)                  +44 (0)20 3493 8000
 William Simmonds / Rupert Budge

 Singer Capital Markets (Corporate Broker)                 +44 (0)20 7496 3000
 Alan Geeves / Sam Greatrex / William Gumpel (Sales)

 James Maxwell (Investment Banking)

 NSM Funds (UK) Limited (Company Secretary)                HIT@nsm.group (mailto:HIT@nsm.group)
 Brian Smith / Shilla Pindoria

 

Notes

 

1.   By reference to return figures from April 2009 to 21 November 2025
(comparing the NAV total return of the Company relative to the GBP equivalent
total return in respect of the Saba Capital Master Fund from August 2009 to 21
November 2025 and, for the period from April 2009 to August 2009, the monthly
returns for a separate Saba-managed account which reportedly employed a
similar investment strategy as the Saba Capital Master Fund).

 

2.   Figure used is representative of the votes cast on the first resolution
proposed at the Requisitioned General Meeting. Notwithstanding that Saba's
latest publicly disclosed interests in the Company prior to the Requisitioned
General Meeting (as at 16 January 2025) was 14.7 million shares, the Board
believes approximately 14.1 million votes were actually submitted by or on
behalf of Saba at the Requisitioned General Meeting.

 

NOTICE TO U.S. SHAREHOLDERS

 

The Tender Offer relates to securities of a non-U.S. company which are listed
on the London Stock

Exchange and is subject to the disclosure requirements, rules and practices
applicable to companies

listed in the United Kingdom, which differ from those of the United States in
certain material respects.

A circular will be prepared in accordance with U.K. style and practice for the
purpose of

complying with the laws of England and Wales and the rules of the FCA and of
the London Stock

Exchange. The Tender Offer is not subject to the disclosure or other
procedural requirements of

Regulation 14D under the U.S. Securities Exchange Act of 1934, as amended. The
Tender Offer will

be made in the United States pursuant to Section 14(e) of, and Regulation 14E
under, the Exchange

Act, subject to the exemptions provided by Rule 14d-1(d) thereunder, and
otherwise in accordance

with the requirements of the rules of the FCA and the London Stock Exchange.
Accordingly, the

Tender Offer will be subject to disclosure and other procedural requirements
that are different from

those applicable under U.S. domestic tender offer procedures and law. The
Company is not listed on

an American securities exchange, is not subject to the periodic reporting
requirements of the

Exchange Act and is not required to, and does not, file any reports with the
SEC thereunder.

 

It may be difficult for U.S. shareholders to enforce certain rights and claims
arising in connection with

the Tender Offer under U.S. federal securities laws, because the Company is
located outside the

United States, and its officers and directors reside outside the United
States. It may not be possible to

sue a non-U.S. company or its officers or directors in a non-U.S. court for
violations of U.S. securities

laws. It also might not be possible to compel a non-U.S. company or its
affiliates to subject

themselves to a U.S. court's judgment.

 

To the extent permitted by applicable law and in accordance with normal U.K.
practice, the Company, J.P. Morgan Securities plc (which conducts on its UK
investment banking activities as J.P. Morgan

Cazenove) ("J.P. Morgan Cazenove"), Singer Capital Markets Securities Limited
("Singer Capital Markets") or any of their respective affiliates may make
certain purchases of, or

arrangements to purchase, shares of the Company outside the United States,
other than pursuant to the Tender Offer, before or during the period in which
the Tender Offer remains open for acceptance, including sales and purchases of
shares effected by J.P. Morgan Cazenove and/or Singer Capital Markets acting
as market maker in the shares.

 

Important information

This announcement is released by the Company and the information contained
within this announcement is deemed by the Company to constitute inside
information for the purposes of Article 7 of UK MAR. Upon publication of this
announcement via a Regulatory Information Service, such information is now
considered to be in the public domain. The person responsible for arranging
for the release of this announcement on behalf of the Company is NSM Funds
(UK) Limited, the company secretary.

The Company's LEI number is 213800U7G1ROCTJYRR70.

The Tender Offer is to be made only on the terms, and subject to the
conditions, set out in the circular in due course (and, in the case of shares
held in certificated form, in the associated tender form).

The Board makes no recommendation to shareholders as to whether or not they
should tender all or any of their shares under the Tender Offer. Whether, and
the extent to which, eligible shareholders participate in the Tender Offer is
a matter for each eligible shareholder to decide and will be influenced by
their own individual financial and tax circumstances, views on the Company's
prospects and investment priorities.

 

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