BlackRock Reaches Agreement to Repurchase Shares of Closed-End Funds
BlackRock Inc. (BLK) has entered into an agreement to repurchase shares of two of its largest closed-end funds: Innovation and Growth Term Trust (BIGZ) and Health Sciences Term Trust (BMEZ). This follows a multiyear campaign by activist hedge fund Saba Capital Management, alleging poor performance and investor harm.
Under the "standstill" agreement, BlackRock will tender an offer to repurchase shares at close to their net asset value (NAV). Saba has agreed to withdraw shareholder proposals to shake up the funds' boards and vote its shares in line with the board.
Saba will withdraw a significant portion of its outstanding shares: 50% for BIGZ and 40% for BMEZ. The repurchase price is set at 99.5% of NAV.
This agreement is part of BlackRock's commitment to shareholder-friendly initiatives, liquidity events, and governance enhancements. Saba believes these changes will unlock value for all investors.
Closed-end funds have been targeted by activists for trading below their NAV. Saba and other hedge funds have pressured managers to close the discount by buying shares and urging repurchase programs.
As of Tuesday's announcement, BlackRock's Innovation and Growth Term Trust had approximately $1.8 billion in assets, while its Health Sciences Term Trust had $1.7 billion.