DEFC14A: NYLI CBRE Fund Fights Activist Bid to Declassify Board and Elect Dissident Nominee

NYLI CBRE Global Infrastructure Megatrends Term Fund urges shareholders to support its incumbent trustee nominees and reject a non-binding proposal from activist investor Saba Capital Management to declassify its Board at the upcoming October 2025 annual meeting.

Summary

• The Annual Meeting of Shareholders for NYLI CBRE Global Infrastructure Megatrends Term Fund is scheduled for October 1, 2025, at 2:00 p.m. Eastern time in New York City.
• Shareholders will vote on the election of five Trustees: two Class II Trustees to serve until 2027 and three Class III Trustees to serve until 2028.
• Activist investor Saba Capital Management, L.P. (Saba) has taken a position in the Fund and announced its intention to nominate Paul Kazarian as a Trustee and submit a non-binding proposal to declassify the Fund's Board of Trustees.
• The Fund's Board unanimously recommends voting FOR its Class II and Class III Trustee nominees and AGAINST Saba's declassification proposal, urging shareholders to use the WHITE proxy card.
• The Board asserts that Saba regularly seeks actions that can result in adverse consequences for long-term investors in closed-end funds.
• The Board maintains that a classified board structure provides stability, continuity, and independence, and enhances long-term planning, and that only shareholders, not the Board, have the authority to amend the Declaration of Trust to declassify the Board.
• The Fund's outstanding common shares as of July 7, 2025, totaled 52,047,534.00.
• Major shareholders as of July 7, 2025, include Morgan Stanley Smith Barney LLC (23.77%), Raymond James & Associates, Inc. (14.74%), and Merrill Lynch, Pierce, Fenner & Smith Incorporated (9.87%).
• The estimated total cost for proxy solicitation, borne by the Fund, is between $275,000 and $325,000, plus reasonable out-of-pocket expenses.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the filing details a contested proxy battle, which introduces uncertainty and costs, the Board expresses strong confidence in its current governance structure and its nominees, actively defending its position. There are no direct financial performance indicators to sway sentiment positively or negatively based solely on this filing.

Positives

• The Board emphasizes the extensive experience of its Trustee nominees in investment company oversight, familiarity with the Fund, and its manager and subadvisor.
• The Fund's classified board structure is highlighted as providing stability, continuity, and independence, which enhances long-term planning.
• The Board has established a robust governance framework with six out of seven Trustees being independent, and specialized committees (Audit, Contracts, Investment, Nominating and Governance, Operations Oversight) to oversee various aspects of the Fund's operations and risks.
• The Board has a formal Board Service Policy for Independent Trustees, promoting orderly succession planning.

Negatives

• The presence of an activist investor, Saba Capital Management, and its proxy contest introduces uncertainty and potential disruption to the Fund's governance.
• The Board explicitly states that Saba regularly seeks actions which can result in adverse consequences for long-term investors.
• The Fund will incur significant expenses for proxy solicitation, estimated between $275,000 and $325,000, due to the contested election.
• The Board's Board Service Policy requires two current Trustee nominees (Alan R. Latshaw and Richard S. Trutanic) to tender their resignations by December 31, 2026, and December 31, 2027, respectively, due to age limits.

Risks

• Saba Capital Management's history of seeking actions that can result in adverse consequences for long-term investors poses a risk to the Fund's stability and long-term strategy.
• The potential election of a dissident nominee could alter the Board's composition and strategic direction, potentially impacting the Fund's operations.
• If KPMG's objectivity and impartiality are impaired, the Fund may need to change its independent auditor, which could lead to disruptions or additional costs.
• The Board acknowledges that it is not possible to identify or mitigate all risks, and certain investment risks must be borne to achieve the Fund's objectives.

Future Outlook

The Fund's Board is focused on maintaining its current classified board structure, which it believes provides stability and supports long-term planning. It anticipates a contested election at the upcoming annual meeting and is actively soliciting shareholder votes to re-elect its nominated Trustees and reject the declassification proposal, emphasizing the potential adverse consequences of the activist's agenda for long-term investors.

Management Comments

• Kirk C. Lehneis, President, stated, 'This Meeting is very important as Saba has taken a position in the Fund and the Dissident announced its intention to nominate Paul Kazarian... and to submit a non-binding proposal to declassify the Board.'
• Kirk C. Lehneis also commented, 'Saba regularly seeks to cause closed-end funds to engage in actions which can result in adverse consequences for long-term investors.'
• The Board 'unanimously OPPOSED to the nomination of the Dissident Nominee and the Saba Declassification Proposal as they do not believe the Saba Proposals are in the best interest of the Fund or its shareholders.'
• The Board urges shareholders 'NOT to sign or return or vote any other color proxy cards sent to you by the Dissident.'

Industry Context

This filing highlights a common dynamic in the closed-end fund industry, where activist investors like Saba Capital Management often target funds with classified boards, seeking declassification and board representation to potentially influence strategies such as tender offers or liquidations. The Fund's defense of its classified board structure aligns with a traditional view that such structures provide stability and protect long-term investment strategies from short-term pressures, a common argument against activist demands in this sector.

Comparison to Industry Standards

• The Fund's classified board structure, with staggered three-year terms, is a common feature among closed-end funds, often cited for promoting stability and long-term strategic oversight, contrasting with annually elected boards prevalent in many open-end funds and operating companies.
• The Board's policy requiring Independent Trustees to tender resignation by age 75 or after 15 years of service aligns with evolving corporate governance best practices that encourage board refreshment and diversity of experience, though specific age/tenure limits vary across the industry.
• The waiver of Control Shares by the Board is a proactive measure to allow large shareholders to exercise full voting rights, which can be seen as a shareholder-friendly move compared to companies that maintain such restrictions to deter hostile takeovers.
• The Fund's engagement of a professional proxy solicitation firm and the estimated costs are typical for contested proxy battles in the investment fund industry, reflecting the significant resources required to secure shareholder votes against activist campaigns.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Directly impacted by the outcome of the Trustee elections and the declassification proposal, which could influence future fund strategy, stability, and potential returns. They are also bearing the costs of the proxy solicitation.
• Management and Board: Engaged in a proxy contest, requiring significant time and resources to defend their positions and solicit votes.
• Investment Manager (New York Life Investments) and Subadvisor (CBRE Investment Management Listed Real Assets LLC): Their oversight and operational relationship with the Fund are subject to the Board's composition and governance structure, which could be influenced by the proxy contest outcome.

Next Steps

• Shareholders are urged to vote on the election of Trustees and the declassification proposal by October 1, 2025.
• The Annual Meeting of Shareholders will be held on October 1, 2025, at 2:00 p.m. Eastern time.
• Shareholder proposals for the 2026 annual meeting must be received by March 23, 2026, 5:00 p.m. Eastern Time.

Key Dates

Recommendation

The filing primarily concerns a contested board election and a declassification proposal from an activist investor. While the outcome could influence future fund strategy and potentially valuation, the filing itself does not provide financial performance data to warrant a 'buy' or 'sell' recommendation. Investors should hold to observe the resolution of the governance dispute and its long-term implications for the fund's stability and strategy.

Keywords

NYLI CBRE Global Infrastructure Megatrends Term Fund, Closed-End Fund, Proxy Statement, Shareholder Meeting, Board Election, Trustee Nominees, Board Declassification, Saba Capital Management, Activist Investor, Corporate Governance, Investment Management, Infrastructure Fund, SEC Filing