Saba Capital’s Boaz Weinstein is to join the board of SDCL Efficiency Income (SEIT), along with Richard Pavry, the former right-hand man of European fund manager Alexander Darwall, to oversee its managed wind-down.
Pavry, former chief executive of Devon Equity Management, Darwall’s firm before its sale to River Global last October, is being put forward by General Atlantic. The US growth equity firm is SDCL’s second biggest shareholder with a 16% stake.
Weinstein is founder and chief investment officer of New York-based Saba, an investment company activist that is the renewable fund’s largest shareholder, having built a 27.8% position in shares and total return swaps.
Chair Tony Roper said Saba had approached the board after shareholders formally voted to put the company into wind-down in July following the decision in April, and requested it nominate a director. During consultation with shareholders on the proposal, General Atlantic also requested it have a director too.
Both appointments are subject to shareholder approval at a general meeting to be held in London on 15 October. The board is recommending shareholders vote for the appointments. Both Weinstein and Pavry will be non-independent non-executive directors and will not receive a fee for their roles.
This will increase SDCL’s board to six directors. In addition to Roper, a former HICL Infrastructure (HICL) fund manager, the £395m investment trust has three non-execs: Helen Clarkson, Sarika Patel and Rosemary Boot.
The enlarged board will oversee the sale of assets by fund manager Jonathan Maxwell, chief executive of Sustainable Development Capital who struggled to grow a portfolio hobbled by a lack of fresh capital due to the long-standing share price discount, currently at 52%.
“The board recognises that each of Saba and General Atlantic has a material and direct interest in the successful outcome of the wind-down and considers that the presence of directors nominated by each of these investors on the board will bring meaningful alignment of interest with the broader shareholder base to the process,” Soper said in a statement on Friday.
Our view
Matthew Read, senior analyst at QuotedData, said: “The appointment of representatives of major shareholders to an investment company board is unusual, particularly when both are explicitly non-independent, and smaller shareholders will need to watch closely to ensure that their interests remain properly protected during the wind-down. That said, there is some comfort in having both Saba and General Atlantic represented.
“Richard Pavry should provide a useful counterweight to Boaz Weinstein, rather than leaving one dominant shareholder with a privileged seat at the table, and both investors also have a substantial financial interest in maximising the value realised from SEIT’s assets.
“Overall, provided that conflicts are managed properly, the independent directors remain firmly in control and, crucially, all shareholders are treated equally, we do not have a problem with this arrangement. It will be a useful test case to see if this set up can actually add value.”
