DEFA14A: BlackRock Defends BIGZ Against Saba's Takeover Attempt, Urges Shareholders to Vote White Proxy

BlackRock is urging shareholders of the BlackRock Innovation and Growth Term Trust (BIGZ) to vote against a takeover attempt by Saba Capital Management, emphasizing the potential negative impact on long-term investment value.

Summary

• BlackRock is actively defending the BlackRock Innovation and Growth Term Trust (BIGZ) against a takeover attempt by Saba Capital Management.
• BlackRock claims Saba's takeover attempts have historically led to underperformance, deeper discounts, and higher fees for shareholders.
• BlackRock highlights BIGZ's total shareholder returns of 17.0% in 2023, outperforming its peer ASG at 14.1%.
• BIGZ has significantly narrowed its discount to NAV, from 22.8% on 12/31/2022 to 13.6% on 5/31/2024.
• BlackRock has implemented a share buyback program, repurchasing $177 million in shares, with an additional $36 million planned, to mitigate discounts and increase NAV.
• A discount management program is in place to increase annual liquidity at NAV, with a potential repurchase of 2.5% of outstanding shares each quarter if the discount exceeds 7.5%.
• Shareholders are urged to vote FOR the Class I and Class II Board Member Nominees and AGAINST Saba's proposal to terminate the investment management agreement.
• Shareholders are instructed to use the WHITE proxy card provided by BlackRock and disregard any gold proxy cards from Saba.

Sentiment

Score: 7

Explanation: The document conveys a sense of urgency and determination from BlackRock in defending its fund against a hostile takeover. While highlighting positive performance metrics, the overall tone is defensive, reflecting the inherent risk and uncertainty associated with the situation.

Positives

• BIGZ has demonstrated strong total shareholder returns, outperforming its peer group.
• The fund has actively managed its discount to NAV, improving shareholder value.
• BlackRock's share buyback program has been effective in mitigating discounts and increasing NAV.
• The discount management program provides a mechanism for increasing liquidity at NAV.

Negatives

• Saba Capital Management is attempting to take control of BIGZ, which BlackRock argues could negatively impact shareholder value.
• The fund's common shares trade at a discount to NAV, indicating market concerns or inefficiencies.

Risks

• Saba's takeover attempt could lead to changes in fund management and investment strategy, potentially harming long-term performance.
• Failure to maintain the discount management program could result in a widening discount to NAV.
• Market conditions could negatively impact the fund's NAV and market price.

Future Outlook

The fund intends to offer to repurchase 2.5% of its outstanding common shares at a price equal to 98% of NAV following the end of each quarter (June 30, 2024, September 30, 2024, December 31, 2024 and March 31, 2025) if the fund's common shares trade at a discount of more than 7.5% during each of those quarters.

Management Comments

• Stephen Minar, Managing Director, Closed-End Funds at BlackRock, urges shareholders to vote to defend the fund and save their income.
• BlackRock believes a self-interested hedge fund is seeking control of BIGZ for a quick profit at the expense of long-term shareholders.

Industry Context

Closed-end funds are often targeted by activist investors like Saba Capital Management due to their fixed capital structure and potential for discounts to NAV. This situation highlights the ongoing tension between fund managers and activist shareholders seeking to unlock value.

Comparison to Industry Standards

• The document compares BIGZ's performance to ASG, the only other closed-end fund in the Morningstar Mid-Cap Growth Category.
• The document highlights BIGZ's outperformance compared to ASG, with BIGZ's total shareholder return of 17.0% in 2023 compared to ASG's 14.1%.

Stakeholder Impact

• Shareholders face the risk of potential underperformance and higher fees if Saba's takeover attempt is successful.
• Employees of BlackRock may be affected by changes in fund management if the investment management agreement is terminated.

Next Steps

• Shareholders are urged to vote using the WHITE proxy card.
• The annual meeting will be held on June 25.
• The fund intends to offer to repurchase 2.5% of its outstanding common shares at a price equal to 98% of NAV following the end of each quarter (June 30, 2024, September 30, 2024, December 31, 2024 and March 31, 2025) if the fund's common shares trade at a discount of more than 7.5% during each of those quarters.

Key Dates

Keywords

BlackRock, BIGZ, Saba Capital, takeover, proxy, shareholder, discount, NAV, investment management, closed-end fund