DEFC14A: Saba Capital Seeks to Shake Up Nuveen Variable Rate Preferred & Income Fund Board

Saba Capital is soliciting proxies to elect its nominee, Jason Chen, to the board of Nuveen Variable Rate Preferred & Income Fund, aiming to address the fund's persistent discount to net asset value (NAV).

Summary

• Saba Capital Management is seeking shareholder support to elect Jason Chen to the board of Nuveen Variable Rate Preferred & Income Fund at the upcoming 2024 annual meeting.
• Saba believes the fund's common shares trade at a significant discount to NAV (11.95% as of February 28, 2024) and that fresh perspectives are needed on the board.
• The annual meeting is scheduled for May 15, 2024, in Chicago.
• Saba is also seeking shareholder support to ratify the selection of KPMG LLP as the fund's independent registered public accounting firm for the fiscal year ending July 31, 2024.
• As of January 19, 2024, the record date, there were 24,164,141 common shares and 85,000 preferred shares outstanding.
• Saba beneficially owns 1,399,537 common shares, representing 5.79% of the outstanding common shares.
• Saba has retained InvestorCom to provide solicitation and advisory services in connection with this solicitation for a fee not to exceed $20,000.
• The estimated cost of the proxy solicitation is approximately $80,000, which will be borne by Saba.

Sentiment

Score: 6

Explanation: The document reflects a moderately positive sentiment from Saba Capital's perspective, as they believe their nominee can improve the fund's performance. However, there are underlying concerns about the fund's discount to NAV.

Positives

• Saba Capital, as a significant shareholder, is actively seeking to improve the fund's performance and address the discount to NAV.
• The nomination of an independent trustee could bring fresh perspectives and potentially lead to strategies that close the discount to NAV.
• Saba is bearing the costs of the proxy solicitation, indicating a strong commitment to its proposed changes.

Negatives

• The fund's persistent discount to NAV suggests underlying issues that the current board has not been able to resolve.
• A proxy contest can be disruptive and costly, regardless of the outcome.
• There is no guarantee that electing Saba's nominee will lead to a significant improvement in the fund's performance.

Risks

• The election of Saba's nominee is not guaranteed, and the current board may resist the proposed changes.
• Even if the nominee is elected, there is no assurance that the discount to NAV will be closed.
• Market conditions and other factors beyond the board's control could continue to impact the fund's performance.

Future Outlook

Saba Capital aims to improve the fund's performance by electing its nominee to the board, with the goal of closing the discount to NAV.

Management Comments

• Saba believes that the Fund's board of trustees needs fresh ideas and perspectives to address the Fund's persistent trading discount.
• Saba is convinced that NOW is the time to take action to close the Funds discount and urges shareholders to elect the Nominee, who they 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 NAV, seeking to unlock value through board representation or strategic changes.

Comparison to Industry Standards

• It's common for activist investors like Saba Capital to target closed-end funds that exhibit a significant discount to their net asset value.
• Other activist investors, such as Bulldog Investors and Karpus Management, have engaged in similar proxy contests to influence the direction of closed-end funds.
• The success of such campaigns often depends on the specific circumstances of the fund, the quality of the activist's nominees, and the support they garner from other shareholders.

Stakeholder Impact

• Shareholders could benefit from a reduction in the discount to NAV if Saba's nominee is elected and effective.
• The fund's management and board could face increased scrutiny and pressure to improve performance.
• The outcome of the proxy contest could influence the fund's future direction and investment strategy.

Next Steps

• Shareholders need to vote on the GOLD proxy card to elect Jason Chen to the board.
• The Annual Meeting will be held on May 15, 2024, where the election and ratification of the auditor will take place.

Key Dates

Keywords

proxy solicitation, Nuveen Variable Rate Preferred & Income Fund, Saba Capital, Jason Chen, discount to NAV, board of trustees, annual meeting, KPMG, proxy