BlackRock Prevails in Shareholder Battle Against Saba Capital Management

BlackRock, the world’s largest asset management company, emerged victorious this week as shareholders voted to retain its directors and uphold its management of four closed-end funds, according to new data released on Friday.

Background of the Battle:

Hedge fund manager Boaz Weinstein’s Saba Capital Management, a significant investor in BlackRock’s closed-end funds, has been engaged in a prolonged battle with BlackRock over the management and governance of 10 funds.

Saba sought to replace BlackRock’s directors with its nominees and to terminate BlackRock as the manager of some funds, citing underperformance and advocating for measures to reduce the funds’ discounts to their underlying assets.

The outcome of the Shareholder Vote:

Shareholders voted to retain BlackRock as the investment adviser and support the incumbent board nominees across several funds. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds, emphasized shareholder confidence in BlackRock’s stewardship and management.

Despite its efforts, Saba failed to gather sufficient votes to implement its proposed changes at any of the eight funds where voting took place. Meetings at two funds were adjourned due to quorum issues.

Implications and Legal Battles:

Saba argued for enhancing shareholder value by narrowing the funds’ discounts and advocating for share buybacks, potentially unlocking $1.4 billion.

The dispute between BlackRock and Saba has extended to the courts, with recent key rulings highlighting the contentious nature of the mutual fund industry.

Strategic Advisors

During the shareholder battle, BlackRock received strategic advice from JPMorgan Chase, Sidely Austin LLP, Willkie Farr & Gallagher LLP, Stradley Ronon, and Georgeson.

This episode underscores the significance of governance and shareholder activism in the mutual fund sector, where large asset managers like BlackRock face scrutiny and challenges from investors seeking to influence strategic decisions and enhance fund performance.