PRESS: Baillie Gifford US Growth urges City rules overhaul - Sky News
Baillie Gifford US Growth Trust PLC is asking UK ministers to urgently reform City rules as it attempts to fend off activist investor Saba Capital Management LP, Sky News reported on Wednesday evening.
Shares in the US growth stock-focused investment trust, whose investees include Space Exploration Technologies Corp, closed flat at 396.00 pence on Wednesday in London.
Chair Tom Burnet has written to Douglas Alexander, secretary of state for Scotland, and City Minister Lucy Rigby, "urging [them] to plead for an overhaul of the City rulebook," Sky said, adding that it has seen a copy of the letter.
The outlet noted that Saba's Founder & Chief Investment Officer Boaz Weinstein, in a recent interview, claimed that "his interventions had produced more than [GBP600 million] of profits for investors in the companies in which it had built stakes."
However, Burnet's letter responded: "Whatever the merits of that claim, neither it nor its proposal for a cash exit for shareholders has been subject to the scrutiny a board's own statements must undergo."
Burnet is calling on the government to reform City rules so that activist investors are held to the same information disclosure standards as the boards of listed companies, and so that investors who hold shares through intermediaries can vote more easily.
"Directors of listed companies are rightly required to ensure that what they tell shareholders and the market is fair, accurate and not misleading, and to provide the necessary information which is material to an investor for making an informed assessment in relation to their investment," the letter continued. "A shareholder campaigning to take control of the same company - addressing the same investors, through the media and directly, and asking for their votes - faces no equivalent obligations."
Burnet said the "threat" facing Baillie Gifford US Growth also affects the wider UK investment trust sector.
Saba, which holds nearly 30% of shares in the trust, declined to comment.
Previously, in late September, the Association of Investment Companies warned that Baillie Gifford US Growth shareholders must "make their voices heard" at its annual meeting on October 23 if they wish to stop Saba from taking control.
The activist investor has requisitioned three resolutions for the AGM to appoint Saba representatives - Jason Chen, Thomas McGlade and Saba employee James Waterlow - to Baillie Gifford US Growth's board. The trust has urged shareholders to vote against these proposals.
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