Edinburgh Worldwide (EWI) has attempted to gee up its long-term shareholders for a third defence of the investment trust against Saba Capital, saying the board will offer the hostile hedge fund and its supporters another exit opportunity if it survives the vote at the annual general meeting (AGM) on 30 April.

Although Saba succeeded in using its 30% stake to block the board’s proposed 100% tender offer this month, EWI was encouraged by the high proportion of 68.4% of shares that took part in the vote, down slightly from 70.5% at the previous vote in January. Saba narrowly won by 53.8% to 46.2% after gaining the support of two institutional shareholders.

Chair Jonathan Simpson-Dent urged EWI shareholders who have not yet voted for the annual general meeting to do so and back the board against Saba, which is attempting to vote in a new board which is likely to appoint the US as fund manager in place of incumbent Baillie Gifford with a new mandate of investing in other London-listed funds.

According to the Association of Investment Companies, voting deadlines for EWI shareholders on the four biggest share-dealing websites either close this Friday or next Monday.

Simpson-Dent said if his board survived, it would continue the “Path for Growth” strategy that has seen its investment portfolio return 42.1% since October 2024, 18.2% ahead of the S&P Global Small Cap index. Much of this has been fuelled by its big holding in SpaceX, currently accounting for 20.4% of assets, with further gains possible if the rocket and satellite group achieves a record $1.75-$2trn flotation in June.

He said the board would provide Saba and those shareholders who do not support EWI’s long-term investment strategy with an opportunity to exit via a tender offer, while allowing those who support the Company and the independent Board to remain invested.

“It is vital that all shareholders vote at this AGM. The outcome is not predetermined. If shareholders come out in significant numbers, there is a real opportunity to defeat Saba’s proposals,” said Simpson-Dent, who described it as a “decisive moment” for the company.

He added: “A strong turnout and decisive vote will provide clarity, restore stability and allow EWIT to move forward with a clear mandate to execute its Path for Growth strategy. This strategy has already delivered strong outperformance since its implementation 18 months ago, and we firmly believe it represents the most compelling route to maximising long-term shareholder value.”

Our view

Matthew Read, senior analyst at QuotedData, said: “Given the surprise development of two institutions voting alongside Saba – which, on the face of it, appears contrary to their own interests – with the prospect of fees going up dramatically and switching to a mandate that doesn’t offer the same exciting return prospects as EWI – and thereby helping to derail the backstop tender that would have prevented shareholders from being stranded in a Saba-controlled vehicle, it is encouraging to have greater clarity from Edinburgh Worldwide’s currently independent board on its intentions should it remain in place after the AGM. In particular, we welcome its commitment to continue with the existing mandate and Path for Growth strategy, which has so far enjoyed clear support from non-Saba shareholders and has delivered encouraging early results.

“It is clear that the board has been placed in an exceptionally difficult position: trying to act for all shareholders while a significant minority investor seeks to railroad others and impose its own agenda in what looks like an attempt to gather assets under management. That challenge is made all the more acute by the prospect of a SpaceX IPO, which could materially enhance the value of that holding and now risks disproportionately benefiting Saba following the defeat of the board’s earlier proposals.

“It is also telling that all three independent proxy advisers that have issued recommendations – ISS, Glass Lewis and PIRC – are once again recommending that shareholders back the existing board and reject Saba’s nominees. We strongly reiterate our view that shareholders need to get informed and vote in record numbers at the AGM if they are to protect their investment in Edinburgh Worldwide.”

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