(Update of first published on 10 April)
Edinburgh Worldwide (EWI) has called on shareholders to “vote in record numbers” to defend the investment trust’s board for a third time at the annual general meeting on 30 April after activist hedge fund Saba blocked an attempt to give them an exit.

At a general meeting on Friday, Saba and two other institutions voted 53.8% to 46.2% to stop the board’s proposed tender offer which would have enabled them to sell at net asset value (NAV) before Saba attempts to replace the board with its nominees at the AGM.

The turnout was 68.4%, down from the 70.5% turnout earlier this year.

Chair Jonathan Simpson-Dent said: “This is a very disappointing outcome, particularly given the continued strength of support from independent shareholders who have consistently rejected Saba’s plan for control. This process clearly demonstrates the extent to which the current framework allows a determined minority shareholder to exert disproportionate influence, even where its objectives diverge from those of the wider shareholder base.”

“As previously outlined, there remains a high likelihood of Saba succeeding in appointing its proposed new board at the forthcoming AGM on 30 April 2026, which would likely lead to a change in manager and a fundamental shift in the company’s strategy and investment mandate.”

The outcome of Friday’s vote “only increases this likelihood,” he added.

A furious row broke out between the two sides as the board sought to compromise and give shareholders the tender offers that Saba, holder of a 30% stake, had outlined less than two weeks ago.

These would provide shareholders with two opportunities to exit at net asset value (NAV) less costs, the first being soon after the AGM, and the second following a potential SpaceX IPO or liquidity event (and prior to any potential change in investment mandate).

Simpson-Dent said unless Saba expressly withdrew its support within the next seven days, the board intended to proceed with the first of the tenders during the week commencing 20 April.

However, on Monday Saba said it would be “irresponsible” for the board to waste shareholders’ time and money pursuing another tender offer before the AGM.

Simpson-Dent hit back saying: “It is extraordinary that Saba has now chosen to block its own proposal which it claims it is still endorsing. This complete contradiction lays bare the fact that Saba cannot be trusted to follow through on its own commitments, even where those commitments were made publicly to shareholders.”

EWI shares fell 3.2%, or 7.4p, to 220p, having closed last week at a small 0.8% discount to NAV.

The activist hedge fund again lambasted the EWI board for letting its Baillie Gifford fund managers take some profits on its holding in SpaceX last October, a move it estimated had cost shareholders £86m or 10.8% of NAV based on the $1.75trn valuation that reports had suggested the Elon Musk group was seeking in a flotation this summer.

EWI and Baillie Gifford stable mates Scottish Mortgage (SMT), Schiehallion (MNTN) and Baillie Gifford US Growth (USA) have raised their valuation of SpaceX twice in the past four months from $800bn to what analysts at Winterflood believe is a $1.25trn valuation following this year’s merger with xAI. This has lifted the SpaceX holding to 20.4% of EWI’s assets with further gains likely if SpaceX achieves $1.75trn in an initial public offer in June. EWI shares have recovered 55% in the past year but remain down 36% over five years.

The Association of Investment Companies called for legislation to be included in the King’s Speech to stop big minority shareholders like Saba wielding “disproportionate influence”.

“Saba’s vote against the board’s exit tender proposal has deprived other shareholders of an opportunity to exit their investment at close to net asset value while retaining the potential future value from SpaceX,” said AIC chief executive Richard Stone.

Our view

James Carthew, head of investment company research at QuotedData, said of the result on Friday: “This is a surprise and no doubt a huge disappointment for many shareholders, including me. The choice may be selling out at the earliest opportunity and missing the upside of the SpaceX IPO (although perhaps not if you switch the proceeds into another BG trust with a big SpaceX position, such as Schiehallion or Scottish Mortgage), or hanging on and hoping that Saba sticks to its promise to offer an exit post a SpaceX liquidity event. Please do try to vote at the AGM though”.

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