Impax Environmental Markets (IEM) has urged its reduced band of shareholders to vote against the new board of directors that activist hedge Saba Capital wants to impose.
Acknowledging that New York-based Saba was in a strong position with a 31.4% stake in the company following this month’s 80% exit tender offer, chair Glen Suarez said nonetheless it was important for non-Saba shareholders to vote for the existing independent board at the 17 June general meeting.
Saba last month requisitioned a general meeting to replace Suarez and his four non-executive directors with its four nominees Caroline Briault, Steven Grey, Jason Chen and Aaron Morris. It argued the current board did not deserve to remain in post after IEM’s poor performance over the past five years. Even after a 26% rally in the past year, shareholders have seen a total return of just 5.1% since May 2021.
To save time and money, IEM has set the vote on the directors immediately after its annual general meeting (AGM) on the same day. It noted that shareholders had overwhelmingly voted 89.6% in favour of the trust’s continuation under its existing strategy with Impax Asset Management a year ago.
The investment trust, whose market value has tumbled to £183m from £832m after the board arranged the escape route for shareholders, said Saba had supplied no biographical information on the individuals, although Chen was reportedly a nominee for the firm when it battled to replace the board of the Eaton Vance California Municipal Bond Fund in the US two years ago.
“We also have no visibility on what they and Saba’s plans are for the future of the company. Therefore, despite Saba’s effective voting control, the board does not consider it appropriate simply to stand down and recommended that the Saba nominees are appointed to the AGM,” Suarez told shareholders.
He added it was important for shareholders to vote in favour of the AGM resolutions re-electing the current board and reject the Saba resolutions to elect its slate of directors “to continue to have the same high levels of rigour and corporate governance standards for the next chapter for the company.”
Richard Stone, chief executive of the Association of Investment Companies, backed the IEM board. “This is a critical vote for the future of this investment trust. If shareholders wish to retain the existing independent board it is vital that they vote now. The nominated directors have provided no information on their intentions but there is a strong possibility that they may seek to appoint Saba as the asset manager and move Impax away from its environmental mandate. Shareholders need to act quickly to protect their investment if they want this distinctive mandate to continue.”
The AIC said shareholders would have to move quickly as some investment platforms would require votes to be submitted by 10 June.
Our view
Matthew Read, senior analyst at QuotedData, said: “Richard Stone is right to focus on the lack of transparency surrounding Saba’s proposals for Impax Environmental Markets. Shareholders are being asked to vote on a potentially significant change to the future direction of the trust without any meaningful detail on Saba’s intentions, strategic plans or even the backgrounds of its proposed directors. That is not an ideal basis on which retail investors should be expected to make an informed decision, particularly in the case of a specialist trust with a clearly defined environmental mandate.
“More broadly, we agree with Stone’s comments that this situation further highlights the urgent need for changes to the listing rules to better protect retail shareholders. Saba’s repeated attacks on investment companies such as Herald Investment Trust, Edinburgh Worldwide Investment Trust and Impax Environmental Markets increasingly turned into wars of attrition, placing prolonged pressure on boards and shareholder registers through repeated requisitions and costly campaigns. The current framework appears poorly equipped to deal with this type of sustained activist approach and the potential disruption it creates for long-term shareholders and specialist investment strategies.”
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