Separately, the boards of BlackRock World Mining (BRWM), BlackRock Energy and Resources Income (BERI), BlackRock American Income (BRAI) and BlackRock Smaller Companies (BRSC) have all issued statements this morning that say they have entered into agreements with Saba Capital Management LP, under which Saba has given a number of undertakings to each trust as follows:

• Saba will not put forward any proposals to shareholders or requisition any resolution or general meeting of these trusts;
• Saba will not seek to change the composition of the Board of these trusts;
• Saba will not seek to control or influence the Board or the trust itself, or the policies or management of these trusts;
• where able to do so, Saba will vote on any resolution at any shareholder meeting of these trusts in accordance with the respective Board’s recommendation;
• Saba will not engage, directly or indirectly, in any short selling of these trust’s shares; and
• Saba will not engage in any takeover offer for any of these trusts (unless it is recommended by the Board or made by an independent third party without the involvement of Saba) or any other extraordinary transaction with respect to these trusts (other than a transaction recommended by the Board or on the same basis as other shareholders),
• Each announcement says that the respective agreement with Saba lasts until the earlier of the day following completion of the relevant trusts 2027 annual general meeting of shareholders or 31 August 2027.

Each announcement also makes the following statements:

“The Board notes that certain BlackRock closed-end funds in the US and UK have entered into separate agreements with Saba, each of which was negotiated on behalf of the applicable fund and approved by such fund’s board of directors.

“The Company has given no monetary consideration to Saba or any of its affiliates in return for the benefits outlined above, and such benefits do not restrict the Board’s or the Company’s independence in any way. The Board is committed at all times to exercising the best standards of corporate governance, promoting the success of the Company and putting first the interests of shareholders as a whole.”

Whilst these statements are obviously welcome news for the trusts that they apply to, we were initially concerned about the other UK listed BlackRock funds – BlackRock Frontiers (BRFI), BlackRock Greater Europe (BRGE), BlackRock Income and Growth (BRGI), BlackRock Latin American (BRLA), BlackRock Throgmorton (THRG) – that had not made such a statement. However, it has since been reported that these announcements are the result of an agreement between Saba and BlackRock that applies to all of BlackRock’s listed funds. BlackRock has agreed to conduct major tender offers for two of its US listed closed end funds, BlackRock Innovation and Growth Term Trust and BlackRock Health Sciences Term Trust, with shareholders able to exit at 99.5% of NAV. In return, Saba has agreed to withdraw proposals at 48 other BlackRock-managed funds it was targeting and, so far at least, it would appear that this also extends to any other funds in the BlackRock stable. This suggests that, although they haven’t issued statements, BlackRock’s other UK listed funds – BlackRock Frontiers (BRFI), BlackRock Greater Europe (BRGE), BlackRock Income and Growth (BRGI), BlackRock Latin American (BRLA), BlackRock Throgmorton (THRG) – are also off limits for now.

[QD comment: These statements have all arrived on the day of the first of the requisitioned meetings of the seven trusts that Saba has targeted to date. QuotedData has one of its analysts at Herald’s meeting, so stay tuned for an update later. NB: Two independent proxy firms have recommended that Herald shareholders vote against Saba’s proposals. In fact, in all instances where proxy firms have issued recommendations so far, they have all been to unanimously vote down Saba’s proposals.

Our initial thoughts were that these statements likely reflected the fact that Saba has previously engaged in similar attacks in the US, that have involved BlackRock funds, which have ultimately resulted in litigation. The latest news suggests that this is largely true as these events have led to this deal between BlackRock and Saba. This obviously buys all of BlackRock’s funds time to mount a defence and this could be valuable, particularly for its US listed funds as we understand that there is legislation being proposed in the US that, if enacted, will limit Saba’s ability to pursue these sorts of attacks. It seems to us that the UK may need to look measures too that can prevent minority shareholders in similar UK funds being exploited in the ways that Saba proposes. 

One closing thought is that, as helpful to the BlackRock funds as these assurances are, it seems to us that, given the number of stakes in investment companies Saba has already amassed, it will probably be quite busy until 2027 anyway if it decides to continue with its proposed asset grab.]