Saba Capital, the activist hedge fund, has requisitioned a general meeting of shareholders to remove the board of Impax Environmental Markets (IEM).
The US firm emerged with a powerful 29.9% stake in the £832m investment trust last week following an exit tender offer organised by the board that saw nearly 78% of the shares put up for sale. It immediately said it would call a shareholder meeting to replace the directors, claiming they should resign in light of an exodus that showed “little demand for this company to continue in its current state”. In reality, the large number of non-Saba shareholders voting to leave reflected the concern they shared with the board of being stuck in a fund dominated by Saba.
Saba is seeking the appointment of its nominees: Caroline Bault, Steven Grey, Jason Chen and Aaron Morris.
On Friday afternoon, the board, chaired by Glen Suarez, acknowledged the requisition notice had been received from Citibank, acting as custodian on behalf of Saba’s broker Jefferies. It urged its remaining shareholders to take no action and await a further announcement.
Our view
Matthew Read, senior analyst at QuotedData, said: “Now that Saba has formally requisitioned a meeting to vote on replacing the board of Impax Environmental Markets, it is time to ask some important questions. First, given that Saba could not have known how much its fellow shareholders were tendering, how has it very conveniently ended up with 29.9% of IEM post the tender offer, which just avoids it acquiring ‘control’ under the City Code? This feels way too precise to be a lucky guess, so did Saba have an extra box on its tender forms that allowed it to tender just the amount needed that wasn’t available to other shareholders?
“Second, what are the qualifications of Saba’s nominees, and do they have the relevant experience to oversee and govern a UK-listed investment trust? Ask any truly independent investment trust director and they will tell that running a trust involves a lot more than simply occupying board seats – for example, it requires knowledge of governance standards, regulation, shareholder rights, discount management, providing manager oversight – the list goes on and on.
“Third, if the current manager’s mandate is to be reviewed, shareholders should expect a proper and transparent process. In these circumstances, there are established procedures to follow. In the interests of all shareholders, will Saba’s proposed board run a genuine beauty parade, considering proposals from a range of credible managers and advisers, or is the outcome already predetermined in favour of Saba?
“These are not peripheral questions. They go to the heart of whether this exercise is truly about unlocking value for all shareholders as Saba claims, or simply about gathering AUM for Saba as has long appeared to be the case.”
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