SCHEDULE 13D/A: BlackRock Innovation & Growth Term Trust to Repurchase 50% of Shares Following Standstill Agreement with Activist Investor Saba Capital

BlackRock Innovation & Growth Term Trust (BIGZ) has agreed to a cash tender offer to repurchase 50% of its outstanding common shares at 99.5% of net asset value, resolving a dispute with activist investor Saba Capital Management, L.P.

Summary

• BlackRock Innovation & Growth Term Trust (BIGZ) has entered into a standstill agreement with Saba Capital Management, L.P., resolving a prior shareholder dispute.
• Under the agreement, BIGZ will conduct a cash tender offer to repurchase 50% of its outstanding common shares.
• The tender offer price will be 99.5% of the Fund's net asset value (NAV) per share, determined after the offer's expiration.
• The tender offer is scheduled to commence on June 9, 2025, and will expire on the 20th business day thereafter, with payment made within seven business days of expiration.
• Saba Capital, which beneficially owns 27.73% of BIGZ's common shares (60,675,395 shares), has agreed to tender all its shares in the offer.
• In connection with the agreement, Saba Capital withdrew its shareholder proposal previously submitted on October 9, 2024.
• The Fund also cancelled its previously announced tender offer for the quarter ended December 31, 2024, and terminated its discount management program.
• Saba Capital has agreed to customary standstill provisions until the earliest of the Fund's 2027 annual meeting or August 31, 2027, or August 18, 2025, if payment for tendered shares is not made.
• Saba Capital has also agreed to vote its shares in line with the Board's recommendations during the standstill period, including for trustee nominees and against opposing proposals.

Sentiment

Score: 8

Explanation: The agreement represents a significant positive outcome for shareholders, offering a substantial tender offer at a favorable price and resolving an activist dispute. While there are minor negatives like the cancellation of a prior tender and discount program, the overall impact is highly beneficial for shareholder value and corporate stability.

Positives

• Resolution of a shareholder dispute with activist investor Saba Capital, potentially reducing corporate governance friction.
• Commitment to a significant tender offer (50% of outstanding shares) at a favorable price (99.5% of NAV), providing liquidity and value realization for shareholders.
• Saba Capital's agreement to tender all its shares and abide by standstill provisions, including voting in line with the Board's recommendations, ensures stability for the Fund's management.
• The agreement provides a clear path for a substantial return of capital to shareholders.

Negatives

• Cancellation of the previously announced tender offer for the quarter ended December 31, 2024, which might disappoint some shareholders expecting an earlier liquidity event.
• Termination of the Fund's discount management program, which could lead to wider trading discounts in the future if not offset by other measures.
• The tender offer is scheduled for June 9, 2025, meaning shareholders will have to wait several months for the liquidity event.

Risks

• The Fund's obligation to conduct the Tender Offer is subject to conditions, including no delisting from NYSE, no impairment of its regulated investment company (RIC) status, and no legal/regulatory actions challenging the offer.
• Potential for delays in the Tender Offer if certain conditions (e.g., market disruptions, legal challenges) are not met, though the Fund commits to commence as soon as practicable within 20 days of the delaying event's termination.
• The agreement mentions ongoing or future litigation involving other BlackRock funds (ECAT Litigation and ECAT/MUI Litigation), which, while not directly involving BIGZ, indicates a broader context of legal challenges for BlackRock.

Future Outlook

The Fund is committed to conducting a cash tender offer for 50% of its outstanding common shares at 99.5% of NAV, commencing on June 9, 2025. Saba Capital has agreed to tender its shares and adhere to a standstill agreement until at least the Fund's 2027 annual meeting, ensuring a period of stability and alignment with the Board's recommendations. The Fund will not issue new shares or undertake certain corporate actions prior to the tender offer payment date.

Management Comments

• "BlackRock announced today that the Board of Trustees of BlackRock Innovation and Growth Term Trust (NYSE: BIGZ) has approved a tender offer to repurchase 50% of BIGZ's outstanding shares... at a price per share equal to 99.5% of the applicable Fund's net asset value per common share determined following the expiration of the tender offer." (BlackRock Press Release)
• "Saba Capital Management, L.P. (together with certain of its affiliates, 'Saba') today announced that it has entered into standstill agreements... with BlackRock Advisors, LLC... following constructive negotiations." (Saba Press Release)
• "The terms of the Agreements also provide for Saba to tender all of its Common Shares of the Funds and withdraw the shareholder proposals it submitted to the Funds, in addition to complying with certain standstill covenants for a period of three years, encompassing the 2027 proxy season." (Saba Press Release)

Industry Context

This filing highlights a common dynamic in the closed-end fund industry where activist investors like Saba Capital target funds trading at a discount to their Net Asset Value (NAV). Such activism often aims to unlock shareholder value through mechanisms like tender offers, share repurchases, or open-ending the fund. BlackRock's agreement to a significant tender offer at a near-NAV price, coupled with a standstill agreement, is a typical resolution to such activist pressure, providing liquidity to shareholders and a period of reduced governance conflict for the fund. The mention of a similar agreement with BlackRock Health Sciences Term Trust (BMEZ) suggests a broader strategy by Saba Capital targeting BlackRock's closed-end fund complex.

Comparison to Industry Standards

• The tender offer at 99.5% of NAV is a strong outcome for shareholders, as closed-end funds often trade at a discount to NAV. This is a common mechanism used by funds under activist pressure to narrow discounts and return capital.
• The agreement with BIGZ is similar to the one reached with BlackRock Health Sciences Term Trust (BMEZ), where BMEZ will conduct a tender offer for 40% of its shares at 99.5% of NAV, indicating a consistent approach by BlackRock in addressing activist demands across its closed-end fund complex.
• The three-year standstill period is a standard duration for such agreements, providing a defined period of stability for the fund's management free from activist campaigns.

Corporate Governance

Legal Proceedings

• The document mentions ongoing or future litigation between Saba Capital and BlackRock ESG Capital Allocation Term Trust (ECAT Litigation).
• It also refers to potential litigation involving ECAT and BlackRock Municipal Income Fund, Inc. (MUI) related to the proceedings captioned FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., et al, No. 24-345 (U.S. Supreme Court) (ECAT/MUI Litigation).
• These legal proceedings are not directly against BlackRock Innovation & Growth Term Trust (BIGZ) but are noted as exceptions to the non-disparagement and no-litigation clauses in the agreement.

Stakeholder Impact

• Shareholders: Significant positive impact due to the tender offer providing liquidity and value realization at a price close to NAV. Those who tender will receive cash. Those who don't tender may see an improved share price due to reduced supply and activist resolution, but also face the termination of the discount management program.
• Management/Board: Benefits from a period of stability and reduced activist pressure due to the standstill agreement and withdrawal of the shareholder proposal.
• Saba Capital: Achieved a key objective of its activism by securing a substantial tender offer, allowing it to exit a significant portion of its investment at a favorable price.

Next Steps

• BlackRock Innovation & Growth Term Trust (BIGZ) to commence its cash tender offer on June 9, 2025.
• The tender offer will expire on the 20th business day after its commencement.
• Payment for tendered shares will be made no later than the seventh business day after the expiration or closing of the tender offer.
• Saba Capital will tender all its beneficially owned shares in the Tender Offer.
• Saba Capital will adhere to standstill provisions and voting agreements until at least the Fund's 2027 annual meeting or August 31, 2027.

Key Dates

Recommendation

Keywords

BlackRock Innovation & Growth Term Trust, BIGZ, Saba Capital Management, Tender Offer, Closed-End Fund, SEC Filing, Schedule 13D, Activist Investor, Share Repurchase, Net Asset Value, Standstill Agreement, Corporate Governance, Investment Fund