Shareholders in Herald (HRI) investment trust have until 26 June to vote on the make-or-break tender offer announced by the £1.4bn technology fund last month.
Herald has published a circular setting out the timetable for the offer for shareholders to sell up to two thirds of its shares back to the company if they wish.
Although the tender offer will reduce the company’s size, it will ensure the exit of Saba Capital, the US hedge fund with a 30.7% stake whose activist demands had threatened the future of the company.
The investment trust will continue to be managed by Katie Potts who has overseen a 3,718% investment return since launch in 1994. Potts and her team will transfer to Aberdeen Investments, the FTSE 250 fund management group that should be able to market the listed fund more widely.
As a result the Herald board is recommending shareholders vote for the tender offer even if they do not intend to sell their shares.
It said “the proposals will, if implemented, secure a future for Herald, with Katie Potts and Aberdeen Investments, enabling the company to focus on delivering strong investment returns with a supportive shareholder base.”
A general meeting to approve the tender offer will take place on 30 June immediately after Herald’s annual general meeting at 10-11 Charterhouse Square in London.
Shareholders have until 8 June to contact Herald brokers JP Morgan Cazenove or Singer Capital Markets if, like Saba, they wish to receive an in specie transfer of stocks and shares held the investment trust.
They then have until 3.15pm on 26 June to return the blue proxy firms in the circular to vote on the proposed tender offer. Share dealing websites and platforms may have earlier deadlines, however. It needs the backing of 50% of votes to proceed.
Assuming the tender offer is approved, which is likely given Saba is committed to supporting it, shareholders will have until 1pm on 2 July to return the green forms in the circular to say how many, if any, of their shares they wish to sell for cash.
Results of the tender offer and the price at which the shares will be bought back will be announced on 7 July.
Shareholders who do not want to sell do not have to return a form but the board is urging investors to vote for the proposals.
Potts and the fund management team believe the portfolio of smaller technology companies is well positioned for an “exciting” period as the revolution around artificial intelligence (AI), which has so far centred on the largest technology companies in the US, Asia and Europe, broadens and expands.
Our view
James Carthew, head of investment company research at QuotedData, said: “Herald’s NAV and share price have been hitting new all-time highs in recent months as small-cap tech puts 2022’s interest rate driven falls behind it. The market appears to have realised that there is more to the AI story than the handful of US mega cap stocks that are funding the vast capital expenditure needed to support this. Whether those mega caps end up making an acceptable return on their investment is moot; the spending will continue because these companies see winning the race as existential. If you are the sort of investor who gets more excited about narrowing a discount by 5% or 10% than a 49% rise in HRI’s share price over the past 12 months, now is your chance to exit. Otherwise, I would stick around. The Herald story has a long way to run and I’m pleased that we are going to see it play out.”
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