Schroder UK Mid Cap fund (SCP) has struck a deal for Saba Capital to exit its position in the trust via a 100% tender offer.
Saba has agreed to support the offer and tender its full holding of shares. It has also committed to a three-year standstill agreement.
The resolution on the deal requires at least 75% of votes cast at the general meeting on 24 June to be in favour.
The directors will vote in favour and will not tender their shares. Three of them have committed to purchasing £120,000 of additional shares collectively.
SCP said the board will implement a discount management policy aimed at maintaining a mid-single digit discount in normal market conditions, with a view to minimising discount volatility.
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Harry Morley, SCP chair, said: “We are pleased to have reached agreement with Saba to facilitate their exit, allowing us to focus on our differentiated proposition going forward.
“The UK Mid Cap equity space remains one of the most dynamic parts of the investable landscape and with our talented portfolio management team at Schroders, we are confident of the company’s future ability to generate attractive total returns for our shareholders.”
Jean Roche, SCP fund manager, added: “The UK mid cap market continues to provide, every day, a plethora of potentially high returning investment opportunities, such as those we describe as the ‘multi baggers’, and we look forward to continuing to unearth these opportunities for investors.”
Boaz Weinstein, founder and CIO of Saba, said: “After more than a decade trading at a discount, SCP shareholders now have the opportunity to exit at NAV. This is what happens when boards listen to shareholders and engage constructively.
“It is more than just a victory for all SCP shareholders, it is further evidence that the positive transformation of the UK investment trust industry is accelerating.”
