The ongoing battle for control of the Baillie Gifford US Growth fund is representative of a larger threat to the entire £270 billion UK investment trust industry, a financial journalist has warned. Boaz Weinstein, through his investment vehicle Saba, has been attempting to install directors on the boards of investment trusts for two years, a tactic that critics argue exploits loopholes to usurp power and assets.
Weinstein's efforts have targeted trusts like Baillie Gifford US Growth, which invests in companies such as AI firm Anthropic and payment business Stripe. The fate of this particular trust is set to be decided at a shareholder meeting on October 23.
Ruth Sunderland, writing for the Daily Mail, argues that Saba's raids are an "assault on the integrity of UK markets" at a time when the country needs economic growth. She contends that Weinstein's strategy involves installing his own directors to gain control of lucrative investment management contracts, often without paying a takeover premium.
Investors have previously voted against Saba's attempts to gain control, but Weinstein has persisted. The article suggests that this persistence, combined with the inertia of private savers who may find voting difficult through investment platforms, allows Saba to eventually achieve its desired outcome. The author notes that many private investors hold shares through platforms that do not facilitate easy voting.
The Financial Conduct Authority (FCA) is reportedly reviewing the situation, but a senior FCA official's comments about being disinclined to interfere in the "rough and tumble" of the City have reportedly disappointed industry leaders. The article asserts that Weinstein has so far outmaneuvered the regulator.
Sunderland urges shareholders of BG US Growth to vote against Saba's proposals, with deadlines on some platforms as early as October 14. The article concludes by calling for the door to be "slammed shut" on Saba to prevent further damage to the investment trust sector and the broader UK financial market.