By Svea Herbst-Bayliss
NEW YORK (Reuters) – BlackRock (NYSE:) retained board seats at six closed-end funds last week after investment firm Saba Capital Management failed to secure enough votes to replace directors or fire the fund manager, according to data released by BlackRock on Tuesday.
“Based on the preliminary results of last week’s shareholder meetings, it is clear that shareholders have rejected both Saba’s nominees and its efforts to replace BlackRock as the Funds’ investment advisor,” BlackRock said in a statement. The results have not been previously reported.
Saba, led by prominent investor Boaz Weinstein, and BlackRock, the world’s largest asset manager with more than $10 trillion in assets under management, have been locked in a battle for months over the future of ten BlackRock closed-end funds.
Saba wants investors to choose their nominees to the boards of the BlackRock funds and fire BlackRock as manager of some of them.
Weinstein has argued that the funds have had poor returns and wants them to offer to buy back shares from investors. About $1.4 billion in value could be freed up from the funds by lowering the funds’ discount to their net asset value, he said. BlackRock has argued that it has taken action to improve performance and that its directors are better choices than Saba’s nominees.
Investors voted at six BlackRock funds (, en) last week and meetings at BNY and BSTZ were postponed because the quorum was not reached.
Proxy advisory firm Institutional Shareholder Services (ISS) previously wrote that the voting standard for director elections at BlackRock “may function as an entrenchment mechanism” that could make it difficult for an activist investor to win a proxy contest.
“BlackRock is enforcing a voting requirement that is effectively impossible to achieve and was implemented to create botched elections,” Weinstein said in a statement. “While Saba has challenged this entrenchment tactic in court, we are pleased that our fellow shareholders also want to hold BlackRock accountable for destroying billions in value,” he added.
This week there will be a vote for four funds. The funds are BlackRock Innovation and Growth Term Trust, BlackRock Health Sciences Term Trust, BlackRock ESG Capital Allocation Term Trust and BlackRock Capital Allocation Term Trust. Preliminary results, including for BIGZ where the voting took place on Tuesday, are not yet available, BlackRock said. The ten BlackRock funds collectively oversee approximately $10 billion in assets.
While ISS noted that corporate governance remains a concern for the funds, it also wrote that “BlackRock showed attention to the most important issues for shareholders, rather than focusing entirely on vague criticism of Saba.”
