In this article we explain what continuation votes and continuation tender offers are and what they mean for investors. We also give two recent examples of investment trusts which have employed one or the other scheme.
A continuation vote is a vote to ask if a trust should continue with its investment strategy or be shut down. When a trust is wound up, the assets are liquidated over time and cash is returned to shareholders.
Continuation votes are a permanent feature for some investment trusts, occurring annually or every two, three or five years. In other cases, a vote is triggered if poor performance or a persistent discount to NAV (net asset value) exists.
BACKING OF THE BOARD
To use a recent example, on 15 January Nick Train-managed Finsbury Growth & Income (FGT) held a continuation vote. On the day, 97.2% of shareholders in the voted for the 100-year-old trust to continue with its present strategy.
This vindicated the board’s decision to support ‘buy-and-hold’ investor Train through five years of underperformance. Had the continuation vote failed, the board would have been compelled to consider alternative options for how the trust is managed, which might have led to Train’s removal as manager.
See the press release here: https://www.finsburygt.com/
CONTINUATION TENDER OFFERS
Today (26 January), Impax Environmental Markets (IEM) published a ‘Continuation Tender Offer Circular’ as the embattled trust seeks to oust US activist Saba Capital from its shareholder register.
Saba holds a 20.7% stake in IEM and the offer is conditional on it tendering all its shares. If it doesn’t, the board will propose a second offer so shareholders with ‘a short-term investment horizon’ can exit.
For the uninitiated, a Continuation Tender Offer allows shareholders to exit at a price close to net NAV while allowing others to remain. It is often used to resolve deep share price discounts, combat activist investors such as Boaz Weinstein-led Saba or provide liquidity.
A Continuation Tender Offer enables long-term investors to stay with a manager while short-term holders exit at a price close to NAV. If investors reject continuation, a tender offer or full liquidation may follow.
Another UK investment trust which has proposed a 100% tender offer to see off Saba and provide liquidity is Katie Potts-led Herald (HRI).
Impax Environmental Markets’ stated objective is to enable investors to benefit from ‘growth in the markets for cleaner or more efficient delivery of basic services of energy, water and waste’, but performance has disappointed in recent years.
Shareholders in the trust, including Saba Capital, need to decide if they want to continue with their investment or sell up and move on to something else. The Continuation Tender Offer vote is being held at a general meeting on 23 February 2026.
SMOKING OUT SABA
As chairman Glen Suarez explained: ‘Today’s circular sets out a clear and decisive choice for IEM’s shareholders: to remain invested in IEM and its specialist environmental markets mandate, or to exit at close to net asset value per share. The Board is taking this action to protect the interests of all shareholders who have invested in IEM for its long-term, sustainable investment approach-not for opportunistic, short-term discount-driven gains.’
Suarez added: ‘If Saba refuses to tender all, or materially all, of its shares and blocks this process, it is clearly indicating that its motive is control and the board will propose the Exit Tender Offer to ensure Shareholders are not trapped in a vehicle at risk of being repurposed for Saba’s interests.’
Read related news here: https://sharesify.com/impax-environmental-offers-investors-100-cash-exit/
Disclaimer: This content is for information only and is not investment advice. Always do your own research before investing. Click here to see full disclaimer.
