DEFC14A: Saba Capital Seeks to Overhaul BlackRock Innovation & Growth Term Trust Board, Urges Shareholders to Terminate Management Agreement

Saba Capital is soliciting proxies to elect its nominees to the BlackRock Innovation & Growth Term Trust board and terminate the current investment management agreement, citing concerns over the fund's trading discount and corporate governance.

Summary

• Saba Capital Management is seeking to elect its slate of nominees to the board of BlackRock Innovation & Growth Term Trust.
• Saba is also proposing the termination of the investment management agreement between the Fund and BlackRock Advisors, LLC.
• Saba believes the current board needs fresh ideas to address the Fund's trading discount and corporate governance issues.
• The proxy statement is being furnished to shareholders on or about April 21, 2024.
• Saba is nominating three Class II trustees (Ilya Gurevich, Shavar Jeffries, and Jennifer Raab) for a three-year term expiring in 2027.
• Saba is also nominating four Class I trustees (David Littlewood, David Locala, Athanassios Diplas, and Alexander Vindman) to succeed the Incumbent Trustees for a two-year term expiring in 2026.
• As of the close of business on the date of the proxy statement, the Participants may be deemed to beneficially own 52,103,294 Common Shares, representing 23.22% of the outstanding Common Shares.
• Saba is urging shareholders to vote FOR ALL of its nominees and FOR the termination of the management agreement.
• The approval of the proposal to terminate the Management Agreement requires the affirmative vote of a 40 Act Majority.
• Saba estimates that its expenses in connection with the proxy solicitation are approximately $75,000 through the date of the proxy statement and expects the total cost to be approximately $150,000.

Sentiment

Score: 7

Explanation: The document is assertive and confident in its stance, indicating a strong belief in the proposed changes. While critical of the current management, the tone is professional and focused on improving shareholder value. The sentiment is moderately positive from Saba's perspective, but neutral overall.

Positives

• Saba believes its nominees possess the necessary markets experience, understanding of retail investors' needs, corporate governance expertise, and capital allocation skills to address the Fund's challenges.
• Saba is willing to assist the Board in finding a capable manager if the management agreement is terminated, and may offer its services as an interim or long-term manager.
• Shareholders will have the final say on the appointment of any long-term manager.

Negatives

• The Fund has a large and persistent trading discount, which Saba believes is detrimental to shareholders.
• Saba criticizes the Fund's anti-shareholder governance practices.
• The Fund has not held an annual shareholder meeting in 2023, leading to holdover trustees in Class I.

Risks

• There is no assurance that any of the Funds nominees will serve as a trustee if one or more of the Nominees are elected to the Board.
• If the proposal to terminate the Management Agreement is approved by shareholders, the Board will have the ability to appoint an interim manager and/or long-term manager of its choosing, the latter being subject to shareholder approval.
• Failure to approve a permanent investment management agreement could potentially require the Fund to become internally managed.

Future Outlook

Saba intends to supplement the Proxy Statement with the date, time, and location of the Annual Meeting once publicly disclosed by the Fund, as well as the Record Date and the number of Common Shares outstanding as of the Record Date.

Management Comments

• We believe that BlackRock and the Funds trustees must be held accountable for the Funds large and persistent trading discount and its anti-shareholder governance practices.
• Sabas highly qualified slate of Nominees will ensure the Board has the right mix of experience to address the Funds critical challenges.

Industry Context

Activist investors like Saba Capital often target closed-end funds that trade at a discount to their net asset value (NAV). This proxy fight is part of a broader trend of increased shareholder activism in the investment management industry, with investors seeking to unlock value and improve corporate governance at underperforming funds.

Comparison to Industry Standards

• Saba's strategy of nominating its own slate of trustees and proposing the termination of the management agreement is a common tactic used by activist investors in closed-end funds.
• Other examples of activist campaigns in the closed-end fund space include Bulldog Investors' actions against various funds and Karpus Management's involvement in several proxy contests.
• The success of Saba's campaign will depend on its ability to convince shareholders that its nominees and proposals will lead to improved performance and a narrowing of the Fund's discount, similar to how other activist campaigns have been judged.

Stakeholder Impact

• Shareholders: The outcome of the proxy vote will directly impact the composition of the Board and the management of the Fund, potentially affecting the Fund's performance and the value of their investments.
• Employees of BlackRock Advisors, LLC: Termination of the management agreement could impact their roles and responsibilities related to the Fund.
• The Fund's Board of Trustees: The election of Saba's nominees would result in a change in the Board's composition and potentially its strategic direction.

Next Steps

• Shareholders need to vote on the GOLD proxy card FOR ALL of Saba's nominees and FOR the termination of the management agreement.
• Saba will supplement the proxy statement with the date, time, and location of the Annual Meeting once publicly disclosed by the Fund.
• Saba will also supplement the proxy statement with the Record Date and the number of Common Shares outstanding as of the Record Date.

Key Dates

Keywords

proxy solicitation, Saba Capital, BlackRock Innovation & Growth Term Trust, board election, investment management agreement, shareholder proposal, corporate governance, closed-end fund