Herald (HRI) says its 66% tender offer to get hostile shareholder Saba Capital off its register was 5.9% undersubscribed. Excluding the US activist hedge fund – which is selling its 30.7% stake in return for a share of the portfolio – index trackers and other short-term traders, Herald estimates just 10% of long-term shareholders sold out.

Nevertheless, the £1.6bn portfolio of global small technology stocks run by Katie Potts for 32 years, will be much reduced.

Herald said 28.7m, or 60.1% of its shares in issue were validly tendered which means it will make a total distribution of over £956m in cash and stock,

Of these, 16.4m, or 34.3%, chose the in specie option to receive portions of the actual stocks held in the portfolio. These include Saba’s entire position. This accounts for £551m.

In addition, 12.3m, or 25.8%, took cash amounting to £405.7m. This was generated by Potts’ investment team selling holdings in advance.

This leaves the trust, which joined the Aberdeen stable as part of a settlement with Saba, with £650m of assets and no overhang.

Chair Andrew Joy said: “The board is very pleased with this outcome, demonstrating core shareholders’ belief that the company and its investment strategy, with Katie Potts and Aberdeen, can continue to deliver excellent returns.”

Over 10 years Herald has generated a total shareholder return of over 355%.

Our view

Matthew Read, senior analyst at QuotedData, said: “We are not surprised that Herald’s tender offer was undersubscribed. This has been one of the investment company sector’s great long-term success stories and, under Katie Potts, it offers a genuinely differentiated exposure to smaller quoted technology companies that is hard to replicate elsewhere. Nevertheless, the tender has served an important purpose as, after 18 months of uncertainty it has given Saba a way out, removing a potential block for some other investors. It should also leave Herald with a cleaner register of shareholders who understand and back the strategy. With around £650m of net assets remaining, the trust still has meaningful scale and, hopefully, can now move on and rebuild from here.”