DEFC14A: Saba Capital Seeks Board Representation at MainStay CBRE Global Infrastructure Megatrends Term Fund to Address Discount

Saba Capital is soliciting proxies to elect its nominee, Paul Kazarian, to the board of MainStay CBRE Global Infrastructure Megatrends Term 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 trustees of MainStay CBRE Global Infrastructure Megatrends Term Fund at the upcoming 2024 annual meeting.
• Saba believes that the fund's board needs fresh perspectives to address the fund's trading discount, which was 10.73% as of July 19, 2024, and had a one-year average of -13.24%.
• The annual meeting is scheduled for September 27, 2024, at the offices of New York Life Investment Management LLC.
• Saba is also seeking ratification of KPMG LLP as the fund's independent registered public accounting firm for the fiscal year ending May 31, 2025.
• As of July 23, 2024, the Participants may be deemed to beneficially own 5,730,279 common shares of the Fund, representing 11.01% 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 $120,000, which will be borne by Saba.

Sentiment

Score: 6

Explanation: The document reflects a neutral to slightly positive sentiment. Saba Capital is actively trying to improve the fund's performance, which is a positive sign. However, the need for such intervention also indicates underlying issues with the fund's management and performance.

Positives

• Saba Capital, as a significant shareholder, is actively seeking to improve the fund's performance and address its discount to NAV.
• The nomination of Paul Kazarian aims to bring fresh ideas and perspectives to the board.
• Saba is bearing the entire cost of the proxy solicitation, demonstrating its commitment to improving the fund without seeking reimbursement from the fund itself.

Negatives

• The fund's significant discount to NAV (10.73% as of July 19, 2024, and a one-year average of -13.24%) indicates potential underperformance or market dissatisfaction.
• Even if elected, Paul Kazarian would only represent a minority of the board, and there is no guarantee that he would be able to implement changes without the support of other board members.

Risks

• There is no assurance that Paul Kazarian will be elected to the board.
• Even if elected, there is no guarantee that Kazarian will be able to influence the board to take actions that enhance shareholder value.
• The fund's management may resist Saba's efforts to implement changes.
• The fund's discount to NAV may persist even with changes to the board.

Future Outlook

Saba Capital aims to improve the fund's performance and reduce its discount to NAV by electing its nominee to the board. The success of this effort depends on the outcome of the proxy vote and the ability of the nominee to influence the board's decisions.

Industry Context

Activist investors like Saba Capital often target closed-end funds trading at a discount to NAV, seeking to unlock value by influencing management or board decisions. This proxy fight is part of a broader trend of increased shareholder activism in the investment management industry.

Comparison to Industry Standards

• Saba Capital's actions are comparable to other activist investors who target closed-end funds with significant discounts to NAV.
• For example, similar campaigns have been launched against funds managed by Calamos, BlackRock, and Nuveen.
• These campaigns often involve nominating directors, proposing changes to fund strategy, or advocating for a liquidation or merger of the fund.
• The success of these campaigns varies, but they often result in some form of change, such as a reduction in fees, a change in investment strategy, or a narrowing of the discount to NAV.

Stakeholder Impact

• Shareholders could benefit from a reduction in the fund's discount to NAV if Saba's efforts are successful.
• The fund's management and board may face increased scrutiny and pressure to improve performance.
• The outcome of the proxy fight could influence the fund's investment strategy and operations.

Next Steps

• Shareholders need to vote on the GOLD proxy card to support Saba's nominee.
• The Annual Meeting will be held on September 27, 2024, where the election of trustees and ratification of the accounting firm will take place.
• Saba will continue to solicit proxies from shareholders until the Annual Meeting.

Key Dates

Keywords

proxy solicitation, Saba Capital, MainStay CBRE Global Infrastructure Megatrends Term Fund, board of trustees, discount to NAV, Paul Kazarian, annual meeting, KPMG, InvestorCom, closed-end fund