Pantheon: Saba adds 3,853,175 reference shares to its swap, and only 1,628 to the shares that vote

According to the notification published on 27 October, Saba Capital's exposure to Pantheon International reached 13.14% of voting rights at 22 October, against 12.01% at 30 September. Its swap gains 3,853,175 reference shares, its shares, the only ones that vote, just 1,628. Saba's weight at general meetings is nonetheless rising, because Pantheon cancels the shares it buys back.

Why it matters for Pantheon shareholders: Pantheon buys back its shares on the market to cancel them. It had 374,384,094 at 30 September and 370,613,608 after the buyback of 28 October, 3,770,486 fewer, 1.01% of the shares in issue at 30 September (Opulion calculation). Each remaining share carries a little more weight, Saba's included. Measured against the 374,384,094 shares of 30 September, Saba's 20,840,650 shares would still make 5.57% of voting rights (Opulion calculation). The notification published on 27 October gives them 5.61% at 22 October, on 371,522,005 shares, the count Pantheon published that same morning (Opulion calculation: this denominator gives back the notification's three percentages). Our brief of 16 October said this weight would show in each buyback report. Saba is growing its exposure through a contract that does not vote, and it is Pantheon's buybacks that are lifting the weight of its votes.

Saba's swap is a cash-settled total return swap: it pays Saba the performance of 27,984,834 Pantheon shares, without ownership of the shares or their votes. In the United Kingdom, the transparency rules of the FCA, the market regulator, require a notification for a UK company such as Pantheon at 3% and at each whole percentage point crossed above it, upwards or downwards, and count such instruments 'with similar economic effect' together with shares. The form, dated 26 October, dates the crossing to 22 October, and on the figures the threshold crossed is 13% (Opulion calculation). Between the two notifications, the swap rises from 6.45% to 7.53% of voting rights, and the shares from 5.57% to 5.61%.

The gap matters for governance. At the general meeting of 14 October, the votes against the re-election of directors had almost exactly the weight of Saba's shares, and our brief of 16 October calculated that if its swap's reference shares had voted against, the opposition would have exceeded 20%, the level at which the AIC Code of the Association of Investment Companies asks the company to explain how it will consult its shareholders. Opulion hypothesis: if the swap were one day replaced by shares, Saba's votes would rise from 5.61% to 13.14% of voting rights, on the basis of 22 October.

For Pantheon shareholders, three tests will come in order. Each buyback report will give the share count, and with it the weight of Saba's votes. The monthly update at 31 October, expected at the end of November if the pace of the previous ones holds (25 September, then 27 October), will show how many shares Pantheon bought back in October and at what price. On 15 December, the swap's maturity will show whether Saba rolls over its economic exposure, unwinds it or turns it into votes at Pantheon's general meetings, which a new notification will make public if a threshold is crossed.