Gore Street Energy Storage (GSF), the £235m battery fund that shocked investors with a 27% fall in net asset value in its annual results this month, has received a requisition notice from activist hedge fund Saba Capital.
In a short statement yesterday evening, GSF said Saba, which this week lifted its stake to 17%, had requested “that certain resolutions concerning the future of the company be added to the business to be proposed at the company’s upcoming annual general meeting” in September.
“The board is evaluating the requisition and will make a further announcement in due course,” it said.
There was no comment from Saba.
In early trading, GSF shares rose 2.7%, or 1.25p, to 46.9p, slightly narrowing the 38% discount to NAV at which they stood last night. Including dividends, shareholders have lost 39% in the past three years. They listed at 100p in May 2018.
Saba first emerged with a 5% stake last October. Although it has the biggest position, RM Funds, a long-standing shareholder with 6%, has been the main investor to publicly criticise performance, disclosure and governance at the company.
While Edinburgh-based RM failed to get two nominees elected to the board at the AGM last August, the 30% level of support for Brett Miller and Ian Dixon and against the re-election of the chair Pat Cox and senior independent director Caroline Banszky led to a replacement of the board under a new chair Angus Lennox.
Earlier this year Lennox unveiled a new corporate strategy based on a fixed 7p per share dividend backed by asset disposals to fund an upgrade of the portfolio to improve earnings.
Following last year’s sale of Harmony Energy Income Trust to Foresight Group and the liquidation of Triple Point Energy Transition, GSF has only one remaining rival, Gresham House Energy Storage (GRID). It is also under pressure from activist investors over its disappointing share price performance with Primestone Capital and the managers of MIGO Opportunities Trust (MIGO) recently calling for the company to put itself up for sale. If that occurs and GSF, the first battery fund to float in the UK, loses a continuation vote, the sub-sector will have been eradicated just eight years after its creation.
Our view
James Carthew, head of investment company research at QuotedData, said: “Saba’s been building its stake for some time – it went through 5% last October – and so is sitting on a hefty loss on its investment. Best guess is that it is calling for a managed wind-down/sale of the business. As is the case with SDCL Energy Efficiency (SEIT), this would not be an easy process given the diversified nature of the portfolio.”
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