DEFC14A: Saba Capital Seeks Board Representation at Neuberger Berman Next Generation Connectivity Fund to Address Trading Discount

Saba Capital is soliciting proxies to elect its nominee, Paul Kazarian, to the board of Neuberger Berman Next Generation Connectivity Fund, aiming to address the fund's significant discount to net asset value.

Summary

• Saba Capital Management is seeking shareholder support to elect its nominee, Paul Kazarian, to the board of directors of Neuberger Berman Next Generation Connectivity Fund Inc.
• Saba believes that the fund's board needs fresh perspectives to address the fund's trading discount.
• The annual meeting is scheduled to be held at 1290 Avenue of the Americas, New York, New York 10104, but the exact date and time have not yet been disclosed by the Fund.
• Saba intends to supplement the proxy statement with the date and time once it is publicly disclosed.
• As of May 29, 2024, Saba and its affiliates beneficially own 4,967,954 common shares of the Fund, representing approximately 6.31% of the outstanding shares.
• The election of directors requires the affirmative vote of a majority of the outstanding shares of the Fund.
• Saba is urging shareholders to vote FOR its nominee on the GOLD proxy card.
• Campaign Management has been retained to provide solicitation and advisory services for a fee not to exceed $20,000.
• The estimated cost of the proxy solicitation is approximately $90,000, which will be borne by Saba.
• Saba does not intend to seek reimbursement of these costs from the Fund.

Sentiment

Score: 7

Explanation: The document is assertive and confident in its approach to address the fund's discount. While it highlights a problem (the discount), it presents a clear plan of action and expresses optimism about the potential for improvement. The sentiment is moderately positive, reflecting a proactive stance and a belief in the nominee's ability to enhance shareholder value.

Positives

• Saba Capital's involvement could lead to fresh perspectives and strategies to address the fund's trading discount.
• The nominee, Paul Kazarian, has extensive experience in closed-end funds and investment management.
• Saba's significant ownership stake aligns its interests with those of other shareholders.
• Saba is bearing the costs of the proxy solicitation, not the Fund.

Negatives

• The election of the nominee is not guaranteed, as it requires a majority vote.
• Even if elected, the nominee would only represent a minority of the board and may not be able to implement changes without the support of other directors.
• The Fund's management may oppose Saba's efforts, leading to a contested proxy battle.

Risks

• The Fund's board may resist the changes proposed by Saba, hindering efforts to address the trading discount.
• The proxy solicitation process can be costly and time-consuming.
• There is no guarantee that the election of the nominee will lead to improved performance or a reduction in the trading discount.
• The Fund has not yet disclosed the record date for determining shareholders entitled to vote at the Annual Meeting.

Future Outlook

Saba intends to supplement the proxy statement with the date and time of the Annual Meeting once it is publicly disclosed by the Fund and file revised definitive materials with the SEC. Saba intends to deliver this Proxy Statement and the accompanying Form of GOLD Proxy Card to holders of at least the percentage of the Funds voting shares required under applicable law to elect the Nominee at the Annual Meeting and otherwise intends to solicit proxies or votes from shareholders of the Fund in support of the nominations of the Nominee.

Management Comments

• We believe that the board of directors of the Fund (the Board) needs fresh ideas and perspectives to address the Funds trading discount; we have therefore nominated a highly qualified and independent Nominee for election to the Board, whose election, we believe, will send a strong message that the Funds shareholders are not satisfied with the Funds management and their inability to address the Funds significant discount to net asset value.
• We are convinced that NOW is the time to take action to close the Funds discount and we urge shareholders to elect the Nominee, who we believe, if elected, would serve the best interests of all shareholders.

Industry Context

Activist investors like Saba Capital often target closed-end funds trading 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, where investors seek to influence corporate governance and improve fund performance.

Comparison to Industry Standards

• Saba Capital's strategy of nominating directors to closed-end fund boards is a common tactic used by activist investors to unlock value.
• Other examples include similar campaigns by Bulldog Investors and Karpus Management.
• The success of such campaigns often depends on the size of the activist's stake, the merits of their proposals, and the support they garner from other shareholders.
• The typical discount for closed-end funds varies, but a persistent double-digit discount often attracts activist attention.

Stakeholder Impact

• Shareholders may benefit from a reduction in the fund's trading discount.
• The Fund's existing directors may face pressure to address the concerns raised by Saba.
• The outcome of the proxy fight could influence the Fund's future investment strategy and governance.

Next Steps

• Shareholders should vote on the GOLD proxy card.
• Saba will supplement the proxy statement with the date and time of the Annual Meeting once disclosed by the Fund.
• Saba will solicit proxies from shareholders to support the election of its nominee.

Key Dates

Keywords

proxy solicitation, Saba Capital, Neuberger Berman Next Generation Connectivity Fund, board of directors, Paul Kazarian, trading discount, annual meeting, shareholder vote, closed-end fund, investment management