Aberdeen被曝为Herald等投资信托向Saba支付三年停战费用

For sale: Saba repellent
Aberdeen, the fund manager formerly known as abrdn, posted half-year results today. They’re not great — profit beat consensus expectations on lower costs and investment returns, but there was a surprise net funds outflow — though that’s probably only of interest to Aberdeen shareholders.
Potentially more interesting is what happened a couple of months ago, which we’re writing about instead of Aberdeen’s results because very few people seemed to notice. It’s to do with the fund manager taking over the running of Herald Investment Trust, which was badgered into submission by Saba Capital Management, Boaz Weinstein’s activist investment house.
Saba, having successfully lobbied Herald IT to launch a tender offer for up to two-thirds of its share capital, agreed with the incoming manager Aberdeen not to make trouble for three years: no proposals to shareholders, no voting against the board’s recommendation, no attempts to eject directors, no short selling of the shares. These sorts of activist standstill agreements are fairly common.
What’s more unusual is that the deal agreed with Saba doesn’t just protect Herald IT. Here’s the relevant paragraph from page 17 of the tender offer document published in May:
For the avoidance of doubt, the Company [Herald] has not paid consideration to Saba in return for entering into the Standstill Agreement (such that the benefits set out above are at no cost to Shareholders). The proposed incoming manager, abrdn Fund Managers Limited, has agreed to provide consideration (i) to Saba in respect of standstill and other arrangements in relation to nine investment trusts (including the Company); and (ii) to HIML in order to assist with the costs of the management transition and subsequent winding-down of HIML’s business.
Got that? Aberdeen is paying an undisclosed amount to Saba to protect Herald IT and eight other investment trusts.
A person familiar with the companies said the multi-trust agreement was designed to “create a period of stability” for their shareholders.
What this is definitely not, according to several people involved in the talks, is a protection racket orchestrated by Weinstein. The fee Saba collects from Aberdeen goes to investors in its funds, not to the management company. It’s all amicable and sensible. There’s no shakedown.
Aberdeen has, so far, stayed off Saba’s radar. None of the 10 investment trusts it manages has the New York activist as a disclosed shareholder. Two are being wound down. The boards of the remaining eight can now choose whether to activate their Aberdeen-funded Saba repellent. Announcements expected in due course.
Aberdeen said by email:
The transaction was reached through a negotiated process, reflects a commercially sensible resolution in a complex situation and achieves a standstill in Saba’s activities in relation to investment trusts who have signed up to this agreement.
Importantly, investment trust shareholders are not paying for the standstill.
We believe this provides a pragmatic and constructive way forward and supports the stability of the trusts who sign up to the standstill.
Aberdeen’s multi-trust truce is similar in structure to the peace treaty Saba agreed with BlackRock in January that gave cover to 50 of its funds. To our knowledge, however, it’s the first such agreement between an activist and a UK-based fund manager.
Neither side would comment on deal value, which is understood to be on a sliding scale based on Herald IT’s performance under new management.
A person familiar with the negotiations said the price Aberdeen agreed was below market rate, which they said reflected the low likelihood of the eight funds ever becoming Saba targets. Since Aberdeen had to negotiate a standstill for Herald IT, extending cover across its portfolio was a cost-effective option, they added.
Aberdeen will shoulder all of the cost, capitalising Saba’s fee as an intangible asset and amortising the expense over the three-year standstill period.
It’s a notably different treatment to the one Herald IT agreed with its soon-to-be-former manager, Herald Investment Management. Herald IT is covering Herald IM’s wind-down costs by paying £1.75mn, which will be subtracted from net assets and worn by the continuing shareholders.
Saba, having agreed to tender its entire 30.7 per cent stake in Herald IT for assets, dodges this cost of ditching the old manager. It also banks the multi-trust protection fee from the new manager. It also, by signing up for in-specie distribution and taking a portfolio of Herald IT’s assets rather than cash, can cover any equivalent short positions on the cheap. All in all, it looks like a pretty decent trade for Boaz.