Key Takeaways
- • Saba Capital, holding 17% of Gore Street Energy Storage Fund, is pressing shareholders to vote for wind-up of the £244 million investment trust at its 16 September AGM, citing structural underperformance and management accountability concerns.
- • Gore Street's NAV has declined 27% over the past year while shares trade at a 35% discount to the reduced NAV, with dividend coverage of only 0.28 times operational earnings—metrics Saba argues demonstrate failed strategy execution.
- • Saba is demanding transparency on the recent sale of Kilmarnock and Mucklagh battery storage assets to GS EU (a fund managed by Gore Street Investment Management), challenging the adequacy of the valuation process and board disclosures around transaction pricing and auction procedures conducted by adviser Alexa Capital.
- • The activist hedge fund rejected Gore Street's March recovery plan—which proposed asset sales and reinvestment in existing battery storage projects to target a 7p dividend and close the NAV discount—as insufficient to address fundamental performance issues.
- • Saba countered the board's "fire sale" liquidation warning, arguing that wind-up approval would empower the board to determine an appropriate capital return timetable, placing responsibility for outcomes on management rather than shareholders.
Summary
Saba Capital has escalated its campaign against Gore Street Energy Storage Fund ahead of the investment trust's 16 September annual general meeting, calling on shareholders to support wind-up proposals for the £244 million fund. In an open letter, the US activist hedge fund—which controls approximately 17% of Gore Street—demanded greater transparency regarding the recent disposal of two Irish battery storage assets and challenged the board's recovery strategy as structurally inadequate to restore shareholder value.
The core dispute centers on the sale of Kilmarnock and Mucklagh projects to GS EU, a fund managed by Gore Street Investment Management. Saba argues that the transaction failed to address valuation concerns and lacks sufficient disclosure. The activist called on the board to reveal the transaction price and provide details of the auction process conducted by adviser Alexa Capital, rejecting assurances that the sale price matched the assets' most recently published net asset values. Saba further challenged the relevance of NAV-based comparisons, noting that Gore Street has been reducing carrying values across its portfolio, with group NAV falling approximately 15% in the latest quarter alone.
The fund's financial deterioration forms the crux of Saba's case. Gore Street's NAV has declined 27% over the past year while shares still trade at a 35% discount to the reduced NAV. Dividend coverage stands at just 0.28 times operational earnings—a metric Saba characterizes as demonstrating failed strategy execution. These figures underscore the activist's argument that shareholders face substantial ongoing underperformance under current management.
Saba's challenge targets the board's March recovery plan, which proposed selling assets and reinvesting proceeds in existing battery storage projects to increase revenues and support a targeted 7p dividend. The activist contends this strategy would prove insufficient to close Gore Street's substantial NAV discount. Saba also rejected the board's warning that liquidation could trigger damaging asset fire sales, instead arguing that wind-up approval would leave the board responsible for determining an appropriate capital return timetable—a framing that shifts accountability for execution from shareholders to management.
The core dispute centers on the sale of Kilmarnock and Mucklagh projects to GS EU, a fund managed by Gore Street Investment Management. Saba argues that the transaction failed to address valuation concerns and lacks sufficient disclosure. The activist called on the board to reveal the transaction price and provide details of the auction process conducted by adviser Alexa Capital, rejecting assurances that the sale price matched the assets' most recently published net asset values. Saba further challenged the relevance of NAV-based comparisons, noting that Gore Street has been reducing carrying values across its portfolio, with group NAV falling approximately 15% in the latest quarter alone.
The fund's financial deterioration forms the crux of Saba's case. Gore Street's NAV has declined 27% over the past year while shares still trade at a 35% discount to the reduced NAV. Dividend coverage stands at just 0.28 times operational earnings—a metric Saba characterizes as demonstrating failed strategy execution. These figures underscore the activist's argument that shareholders face substantial ongoing underperformance under current management.
Saba's challenge targets the board's March recovery plan, which proposed selling assets and reinvesting proceeds in existing battery storage projects to increase revenues and support a targeted 7p dividend. The activist contends this strategy would prove insufficient to close Gore Street's substantial NAV discount. Saba also rejected the board's warning that liquidation could trigger damaging asset fire sales, instead arguing that wind-up approval would leave the board responsible for determining an appropriate capital return timetable—a framing that shifts accountability for execution from shareholders to management.
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