CQS Natural Resources Growth & Income (CYN ) is offering shareholders the chance to tender 100% of their shares, getting rid of Saba Capital from its share register as part of a ‘standstill agreement’ with the activist.

The £136m trust has announced a series of ‘value enhancing initiatives’ following a strategic review, including giving investors the chance to cash in all of their shares.

Should more than 60% of shares be tendered by investors, the board said it would withdraw the offer and instead propose a liquidation of the whole vehicle. CYN’s shares, which closed on an 8% discount yesterday, were up 2.3% on the news. 

New York-based Saba has already confirmed that it will tender its full holding. The firm, run by vocal activist Boaz Weinstein, is the largest shareholder in the trust, with an around 29% stake including derivatives, according to the latest stock exchange filing. 

Today’s announcement seems to bring a challenging chapter to a close for CYN, which was one of Saba’s original investment trust targets in a high-profile campaign launched just before Christmas. 

Christopher Casey, the trust’s chair, said the tender allows all shareholders to ‘choose to remain invested in the company or to exit for cash’.

He also noted that should less than 60% of shares be tendered, the trust will create a ring-fenced ‘tender pool’ to return cash to shareholders who want out.

‘Importantly, the structure proposed, via the creation of a tender pool, protects those shareholders that choose to remain from the risks involved with liquidating a portion of the fund,’ he said.

To create stability for remaining shareholders, CQS has agreed a ‘standstill agreement’ with Saba, meaning it will not table any more meetings or try and remove the directors. The next continuation vote – previously an annual exercise – will also be postponed until 2028, with votes on whether shareholders want the trust to continue operating then occuring every two years. 

Ash Nandi, analyst at Deutsche Numis, said the fund was already ‘sub-scale’ and ‘further shrinkage looks likely’.

‘We imagine Saba will deem the outcome for CQS as a “win” in gaining a full exit, given it has previously compromised with several partial exits,’ she said.

Saba-targeted European Smaller Companies (ESCT ) has recently delivered a bumper tender, while Middlefield Canadian Income (MCT ) has offered both a cash exit and a rollover into an ETF. 

For CYN shareholders that decide to remain invested, the fund is offering a strengthened ‘investment proposition’, with a fee reduction to 1% of net assets each year and an enhanced dividend policy paying 8% of net asset value (NAV).

These changes are designed to ‘further strengthen the appeal of the company to investors’ and would have been impossible if converting to an open-ended fund, said the board. 

However, multiple analysts noted that the new dividend 8% policy would limit capital growth for the trust, raising further questions over its scale. 

End of a chapter

The initiatives follow ‘constructive discussions’ with Saba after the group requisitioned the trust twice.

It was one of the original seven trusts that Saba challenged at the end of 2024, vying to oust the boards and ultimately install itself as manager. Saba was defeated in all seven votes but came back to CQS as part of a second round of proposals to convert the trust into an open-ended fund to eliminate the discount.

As part of the review, the board looked at a potential combination with another trust. However, the directors, who will not be tendering any of their own shares, ultimately decided the CQS investment strategy had not only delivered strong performance but that the ‘manager’s ability to actively allocate to different commodity sectors as market conditions and trade patterns change is a key differentiator’.

The portfolio of mining and resources equity and debt has had a troubled few years, but although its NAV has fallen over both one and three years, it is still the top performer in its six-strong Deutsche Numis metals and mining sector.

Over five years, however, the fund is firmly in positive territory, with a NAV return of 181.9% putting it easily at the top of the leaderboard. The shares are also top performers over this period, with a total return of 235.2%, almost 100% more than the 143.5% of the second-best performer, BlackRock Energy & Resources Income (BERI ).

Weinstein called today’s announcement the ‘the fifth successful outcome among Saba’s nine UK campaigns in 2025’ and said his firm remains ‘committed to securing similar value-enhancing results for shareholders industry-wide’. 

The firm is expected to plough at least some profits back into other investment trusts, and has disclosed two new trust stakes in the last week.