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European Smaller Companies trust fends off Saba requisition

05 February 2025

It is the seventh trust to reject Saba Capital’s proposals.

By Matteo Anelli,

Senior reporter, Trustnet

Shareholders of the European Smaller Companies trust have voted this afternoon against the requisition proposal advanced by US activist investor Saba Capital.

The trust will be able to continue operating under its current directors, who have collected 62% of shareholders’ votes. Excluding Saba’s own votes, the result was close to unanimous, with 99.5% of votes cast against Saba's plan to replace the board.

This is the sixth defeat for Saba and leaves hope for Edinburgh Worldwide, the last requisitioned trust having to sustain a vote at its general meeting on 14 February.

Emma Bird, head of investment trust research at Winterflood, was “pleasantly surprised”.

“Our initial view on this episode was that Saba could have won several of the votes purely based on low voter turnout. However, we have been pleasantly surprised by the strong turnout of these market participants,” she said.

“We generally view activism in the investment trust sector as positive, given that it can drive shareholder returns and improve corporate governance. However, the proposals put forward by Saba did not appear to be in the best interests of all shareholders.”

According to Bird, the key reasons why this US hedge fund failed to gain the support of other investors included the likelihood of a considerable change in strategy that was not desirable to current shareholders, a lack of clarity on the proposals and concerns around board independence.

James Williams, chairman of the European Smaller Companies trust, said: "Today's vote is a clear and complete rejection of Saba's proposals and a resounding endorsement of the trust’s proven investment strategy, the quality of its independent board and the manager's ability to deliver outperformance.”

 

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