ESCT urges shareholder to vote down Saba's 'damaging' proposals
By Josh White
Date: Monday 20 Jan 2025
(Sharecast News) - The board of the European Smaller Companies Trust (ESCT) urged shareholders to vote against resolutions proposed by Saba Capital Management on Monday, citing concerns that Saba's proposals would fundamentally alter the company's investment strategy.
It also suggested they were based on misleading statements about the trust's performance.
The firm said Saba had expressed its intention to take over the management of ESCT, redirecting its investment focus away from European smaller companies and towards other investment trusts.
Its board, in a statement issued on Monday morning, argued that such a shift would undermine the company's core strategy at a time when the European small cap sector remained attractively valued.
It also warned that Saba's actions could leave shareholders invested in a vehicle that no longer aligned with their original investment objectives.
The board challenged Saba's claims about the company's performance, noting that it had outperformed its benchmark over one, three, five, and 10 years, with a net asset value total return of 51.6% over five years and 202.2% over the 10 years to 31 December.
It asserted that Saba's campaign deliberately misrepresented the company's results to advance its own interests.
ESCT said it had introduced a policy to target a mid-single digit discount in normal market conditions.
The board said it believed that Saba had targeted the trust in the expectation that shareholder apathy could allow it to secure control and benefit from future management fees.
ESCT encouraged shareholders to vote by proxy ahead of the 3 February deadline, with the requisitioned general meeting scheduled for 5 February in London.
"Saba's intentions are now clear, they want to seize control of your company, appoint themselves as manager, profit from the prospective management fees and change the investment approach," said chairman James Williams.
"This will deny shareholders the opportunity to benefit from a proven investment strategy in European smaller companies.
"It could also leave them invested in a vehicle which may be wholly unsuitable for their investment objectives."
Williams encouraged shareholders to "urgently review" the circular.
"This contains the information necessary for you to make an informed decision as the outcome of the vote will impact your investment.
"It is incredibly important that as many shares as possible are voted so that shareholders' wishes are made absolutely clear."
At 1009 GMT, shares in the European Smaller Companies Trust were up 0.72% at 176.86p.
Reporting by Josh White for Sharecast.com.
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