Aberdeen and Herald deal with Saba hailed as 'creative solution'
Aberdeen Group PLC’s Aberdeen Investments is to become the alternative investment manager of Herald Investment Trust PLC, alongside a tender offer and ‘standstill’ deal with Saba Capital Management LP, the firms announced on Thursday.
In response, Aberdeen shares traded 1.8% higher at 218.20 pence on Thursday afternoon in London, while Herald shares rose 2.4% to 3,030.33p each.
Aberdeen and Herald said that Katie Potts, the lead manager of Herald’s outgoing manager Herald Investment Management Ltd, is expected to join Aberdeen along with seven colleagues.
Edinburgh-based wealth and asset manager Aberdeen noted that the HIML funds to be brought under its management, which include the Herald Worldwide Technology Fund, represent around £1.6 billion in combined assets under management.
London-based Herald, which invests in smaller, quoted technology and communications companies, has in addition proposed a tender offer for up to 66% of its issued shares.
Herald said the tender offer gives shareholders the option to exit for a price close to its net asset value, if they do not wish to continue their investments.
This includes Saba, its largest shareholder, which has a roughly 30% stake but has entered into an irrevocable undertaking to tender its shares.
Herald and Aberdeen also announced that they have signed a ‘three-year standstill agreement’ with Saba. The deal commits the activist investor to refraining from exercising any voting rights on any resolutions, proposed at any of Herald’s annual or other general meetings, which go against the recommendation of its board.
‘Furthermore, Aberdeen Investments and Saba have also reached an agreement relating to up to a further eight investment trusts in Aberdeen’s range, with a combined AuM of [around £12.5 billion], who will have the option to participate in a similar standstill arrangement should their independent boards decide to do so,’ Aberdeen added.
‘The Herald team has a long track record of backing early-stage technology companies, and driving material long term growth from those investments...we are delighted to welcome Katie Potts and her team to Aberdeen,’ said Aberdeen Chief Executive Jason Windsor. ‘Completion of this transaction will further grow our franchise and demonstrates our innovation and commitment to the sector.’
In response to Aberdeen and Herald’s announcements, Association of Investment Companies CEO Richard Stone commented: ‘This is a successful outcome for shareholders. It’s excellent to see proposals that will allow Herald Investment Trust to continue to deliver strong returns for its shareholders. We’d like to congratulate the board of Herald and Aberdeen Investments on this creative solution.
‘Herald is a unique investment trust, backing high-growth tech and communications businesses, led by Katie Potts, one of the longest serving managers in the industry. Long may it continue!’
Saba, meanwhile, stated that it had secured a ‘major liquidity win’ and ‘a landmark outcome’ for Herald’s shareholders.
‘HRI marks the sixth UK investment trust of Saba’s seven original campaigns launched in December 2024 where its engagement has resulted in a material liquidity or governance outcome for shareholders.
‘Since then, Saba has made hundreds of millions of pounds for retail investors who would otherwise still be trapped in these trusts at wider discounts,’ the firm said.
Saba Founder & Chief Investment Officer Boaz Weinstein commented: ‘This is what shareholder engagement looks like when boards act in the interests of the people they serve, and it is what Saba will keep demanding across the UK investment trust sector.’
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