(Image: Gordon Terris)
The result of a * crunch vote at a £1 billion Scottish company* * has been revealed.*
The announcement comes following the company’s * annual general meeting today**.*
US hedge fund manager Boaz Weinstein’s Saba Capital Management has failed in its attempt to take control of the board at the £1.1 billion Baillie Gifford US Growth Trust.
Saba, which owns about 29% of Baillie Gifford US Growth, had tabled resolutions to appoint Jason Chen, James Waterlow and Thomas McGlade as directors at today’s annual general meeting of the investment trust.
Excluding Saba and Sessa Capital IM, which like Saba is based in New York, 99.2% of the votes cast by shareholders were in line with the Baillie Gifford US Growth board's recommendations.
Baillie Gifford US Growth, which had total assets of about £1.1bn at September 30, announced that, overall, investors holding 52.8% of shares voted had opposed the Saba resolutions.
A high turnout of more than 82% was crucial to the outcome.
And the four Baillie Gifford US Growth directors proposed for re-election to the board were reappointed, with each backed by 52.9% of shares voted.
Chairman Tom Burnet, one of the four re-elected, said: "On behalf of the board, I would like to pass our gratitude to our independent shareholders for their continued support.
"Those shareholders have again delivered a clear and decisive verdict. They have overwhelmingly rejected Saba’s nominees. For the third time, they have also expressed their clear support for the current board. Repeatedly revisiting matters on which almost all of our independent shareholders have plainly already expressed their view places an unnecessary burden on the company, diverting management time and resources from the delivery of the company’s strategy and the creation of long-term shareholder value and incurring significant costs."
The holdings of Baillie Gifford US Growth include Elon Musk’s SpaceX, artificial intelligence giant Anthropic and payments platform group Stripe.
Mr Burnet said: "Baillie Gifford US Growth is a unique investment trust, offering investors access in scale to the most exciting public and private investments in the US. Since USA’s launch in 2018, it has generated returns in the top decile of all UK listed investment companies and the top decile of all US-focused open-ended funds globally. We are pleased the AGM result represents a clear endorsement from the vast majority of independent shareholders for the current differentiated and high performing strategy to continue.
"We strongly welcome the reforms under consideration by the FCA (Financial Conduct Authority), and the efforts of the AIC (Association of Investment Companies) and others, to strengthen protections for all shareholders. It is critical that these new rules take effect as soon as is practicable so that trusts are better protected from opportunism that is not in the interests of shareholders as a whole."
Tim Campbell, chief executive of Baillie Gifford, told The Herald in an exclusive interview late last month that it would be “incredibly sad” if Saba succeeded in its move on the major Scottish-based investment trust.
He declared Baillie Gifford US Growth, managed from Edinburgh by the investment house he heads, has done an “amazing job” for shareholders.
Read more
- 'Incredibly sad' if £1bn Scottish company loses crunch vote to US hedge fund
- Battle for £1bn Scottish company intensifies as investors urged to act in crunch vote
- Warning shareholders of £1 billion Scottish company risk 'sleepwalking' into a change
- Major Scottish player's £12.5bn truce with US hedge fund which ousted an entire board
- 'Very lucky' chief executive 'probably didn't expect stress of it to be what it is'
Richard Stone, chief executive of the Association of Investment Companies, said after the Baillie Gifford US Growth AGM voting results were announced today: “Shareholders have come out in force to support the existing board of Baillie Gifford US Growth Trust and reject Saba’s nominated directors.
"This is the third time the trust’s shareholders have voted to endorse the current board, but the result was not a foregone conclusion. It was only possible due to a big push from the trust, its manager, the wider industry and the media – resulting in a very high turnout of over 82%."
Saba, having been voted down on two previous occasions by other shareholders of Edinburgh Worldwide Investment Trust (EWIT), ousted that fund’s board on April 30 and installed three US-based individuals it had nominated.
Baillie Gifford, which has funds under management of about £200bn, remains the manager of Edinburgh Worldwide and the tender offer for shareholders which Saba, with a stake of about 30% in this trust, said it would be seeking from the new board has yet to happen.
Edinburgh Worldwide and Baillie Gifford US Growth were among seven UK investment trusts targeted in a major salvo by Saba. The US hedge fund lost all seven of these initial votes to oust the incumbent boards of these funds early last year but has continued in its campaign to force change at various investment trusts.
Stockbroker Investec has calculated that Baillie Gifford US Growth ranked third out of 124 UK-based open and closed-ended US equity funds from initial public offering to September 21 this year.
Meanwhile, stockbroker Panmure Liberum warned earlier this month that there was a “significant risk” of shareholders of Baillie Gifford US Growth “sleepwalking” into a change they “did not seek or desire”.
Baillie Gifford chief executive Tim Campbell. (Image: GT)
Referring to Baillie Gifford US Growth as “USA”, Panmure Liberum said in a note of which research analyst Callum Stokeld is lead author: “USA shareholders are being asked once again to affirm their support for the strategy at the forthcoming AGM, after the trust's largest shareholder proposed three new directors. They have already resoundingly done so on two previous occasions in the past 18 months, but given voting rules and the [circa] 29% to 30% voting stake of the proposer of the requisitioned resolutions, the risk seems clear that shareholders who have previously actively backed the board and managers via their voting rights find themselves passively pushed into a structural change they did not seek or desire.”
It added: “With no details or proposals on how a post-vote vehicle may change, this would represent a step into the dark, but, based on precedent in the US and with liquidity events substantially subsidised by the managers already having been rejected, it seems to us clear that, should the proposals pass, dissatisfied shareholders will have no exit mechanism other than open-market transactions. The exercise of shareholder democracy takes on increased importance, in this light, and we think it imperative that shareholders exercise their voting rights, however they choose to do so and however small or large their holding.”
Baillie Gifford US Growth is a corporate broking client of Panmure Liberum.