Janus Henderson has joined rivals in urging investors of its London-listed investment trusts to reject a takeover attempt from US hedge fund Saba Capital.
The group, which has $382.3billon in assets under management, told shareholders of its European Smaller Companies and Henderson Opportunities trusts to vote against resolution brought by Saba in polls scheduled for 5 and 4 February respectively.
It follows an intervention from £225billion asset manager Baillie Gifford, which urged US Growth Trust, Keystone Positive Change and Edinburgh Worldwide investors to reject Saba’s resolutions.
Saba is hoping to seize control of seven London-listed trusts it has built substantial stakes in, with efforts to overhaul each fund’s board set to be followed with resolutions to appoint itself as investment manager.
The US firm has highlighted high discounts to net asset value and performance issues affecting each trust, and accusing respective boards and managements of failing to take sufficient action in response.
The boards and management of the trusts affected have accused Saba of self-interest and ‘cherry-picking’ data to support its claims, as well as pointing out that performance has improved and discounts have narrowed significantly.
Saba is preparing for a shareholder showdown with boards of seven London-listed investment trusts next month
Boards have also highlighted the relatively high fees charged by Saba’s publicly available funds.
James Williams, chairman of Janus Henderson’s European Smaller Companies Trust, on Wednesday highlighted his fund’s ‘long-term outperformance’ and warned shareholders Saba is attempting to remove a ‘highly qualified, independent board that acts in all shareholders’ interests’.
European Smaller Companies shares have returned 18.9, 74.4 and 257.7 per cent over one, five and 10 years, respectively, according to the Association of Investment Companies.
It has outperformed an average return among peers in the AIC’s European Smaller Companies sector of 12.4, 37.6 and 172.2 per cent over the same time periods, respectively.
The trust sits on a 2.1 per cent discount to net asset value, having narrowed significantly from around 13.5 per cent at the start of 2024.
Williams added: ‘It’s clear that Saba’s motives are self-serving. It would like to install directors who would not be independent of the company’s largest shareholder and has indicated that it may appoint itself as investment manager.
‘This could endanger shareholder protections, radically alter the company’s investment risk profile and deny investors the opportunity to benefit from the proven European small cap investment strategy.
‘The Board is therefore recommending that shareholders vote against resolutions proposed.’
He also echoed warnings from the board of Keystone that ‘Saba is counting on a high proportion of shareholders not voting’, adding that ‘investor participation is key and will determine the company’s future’.
Also echoing Keystone, chair of Henderson Opportunities Trust Wendy Colquhoun told shareholders that Saba’s resolutions could cost them if implemented.
Henderson Opportunities has offered investors the chance for a full cash exit at NAV or the option to rollover into an open-ended fund – Janus Henderson UK Equity Income & Growth – as the trust prepares to wind up.
Colquhoun warned: ‘If Saba succeeds, this offer is at risk of being cancelled with no comparable substitute.
‘Saba is attempting to take control of the company with no assurances as to what will happen to shareholders’ investments.
‘Saba wants to remove a strong and highly qualified independent board that acts in the interests of all shareholders and replace it with its own non-independent board that may put Saba’s interests first.
‘The board’s message to shareholders is clear: please exercise your vote and don’t let Saba take unnecessary risks with your money.’
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