Investment trust Herald calls in the City watchdog in its battle with US raider Saba Capital
Embattled investment trust Herald has raised the alarm with the City watchdog as it tries to fend off an attack by a US raider, in a battle that may spell the end of its existence as a company.Chairman Andrew Joy lashed out as Herald published annual results covering a year that he said was ‘dominated by the unwanted attentions’ of Saba Capital.And veteran stock picker Katie Potts, Herald’s investment manager, said the ‘instability’ generated by Saba ‘has provided a cloud over the year’.The American group holds 31 per cent of Herald, putting it in a position ‘to try to take effective control by a process of attrition’, Joy said.He highlighted the threat that Saba would seek to replace Herald’s board with its own nominees ‘with the likely intention that the new board then appoint Saba in due course to run the company’.He argued that in a case where a director is nominated by a major shareholder, that director should not be allowed to vote on whether to appoint that same shareholder as the investment manager. Under fire: Veteran stock picker Katie Potts (pictured), Herald's investment manager, said the 'instability' generated by Saba 'has provided a cloud over the year'The Financial Conduct Authority declined to comment last night but was understood to be aware of the concerns raised.Herald suffered a blow earlier this month when Saba refused an offer that would have seen it end its bid to take control of the firm. The London-listed trust had offered investors the chance to offload their shares at a price equal to the value of its assets – a premium to its stock price. Shares yesterday fell 1.8 per cent, or 45p, to 2515p.But Herald was forced to cancel the offer after Saba – run by hedge fund manager Boaz Weinstein – voted down the plans. They would have required 75 per cent support, meaning Saba had an effective veto.Herald said at the time that the ‘vast majority’ of investors had supported the offer to sell. Joy said if no better solution could be found, it would be forced to make another such offer requiring only a simple majority for approval.‘This would in all probability spell the end of the company with its current mandate and management,’ he said.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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Investment trust Herald calls in the City watchdog in its battle with US raider Saba Capital
