Under the proposed arrangement, Aberdeen Investments will be appointed investment manager to HRI, with the transition expected to take effect in the third quarter of 2026, subject to shareholder approvals and the finalisation of transitional arrangements.

The deal extends beyond the flagship trust itself, encompassing all funds previously managed by Herald Investment Management Limited (HIML), including the Herald Worldwide Technology Fund.

A key feature of the transaction is the migration of Herald’s investment team to Aberdeen. Eight staff members, led by founder and lead manager Katie Potts, are expected to join the firm, bringing decades of specialist expertise in technology, smaller companies and media investing.

The team will relocate to Aberdeen’s London office, where they will gain access to the firm’s extensive distribution and marketing infrastructure whilst continuing to operate the investment strategy that has guided Herald since 1994.

HRI has announced a proposed tender offer for up to 66% of HRI’s issued share capital, that will allow largest shareholder, Saba Capital Management LP, and other HRI shareholders, an exit at close to NAV, or to continue their investment in HRI. Saba has given an irrevocable undertaking to tender its full holding in HRI.

Assuming the successful completion of the tender process, and subject to necessary approvals and finalisation of transitional arrangements, the change of investment manager is expected to take effect in Q3 2026.

As part of this arrangement, Saba has signed a three-year standstill agreement with HRI and Aberdeen Investments, which (amongst other matters) commits Saba not to exercise any voting rights on any resolutions proposed at any annual or other general meeting of HRI against the recommendation of the board of HRI.

Furthermore, Aberdeen Investments and Saba have also reached an agreement relating to up to a further eight investment trusts in Aberdeen’s range, with a combined AUM of c.£12.5bn, who will have the option to participate in a similar standstill arrangement should their independent boards decide to do so.

Jason Windsor, CEO, Aberdeen Group, said: “The Herald team has a long track record of backing early-stage technology companies, and driving material long term growth from those investments.

“As the fifth largest manager of closed-end funds globally, and as a leading small cap manager, we are delighted to welcome Katie Potts and her team to Aberdeen. Completion of this transaction will further grow our franchise and demonstrates our innovation and commitment to the sector.”

Christian Pittard, head of closed end funds and managing director, corporate finance, Aberdeen Group, said: “As a smaller companies’ specialist with a proud heritage in investment trusts, I am pleased this transaction will not only preserve the future of one of Britain’s best known investment trusts, but also allow Herald’s team to keep doing what they do best as part of Aberdeen’s growing closed end funds stable.

“We would like to thank the HRI Board for their confidence in appointing Aberdeen as manager of one of the jewels in the investment trust sector’s crown and the Herald team for committing to join Aberdeen.

“We would also like to thank Saba, who deserves special mention for working constructively and creatively to end the impasse. Saba’s collaboration and determination to find a path forward that benefited all shareholders ultimately made it possible to preserve this trust and, together, deliver an outcome that is positive for everyone.

“The agreement regarding our wider active UK trust range provides a pragmatic and constructive way forward and supports the stability of the trusts who sign up to the standstill.”

Katie Potts, founder of Herald Investment Trust, added: “Herald has delivered a clear and successful investment strategy since 1994, and this disciplined approach will remain unchanged with Aberdeen, who I look forward to joining.

“Our focus remains firmly on the technology and communications sectors, which continue to benefit from exceptional innovation and strong long-term growth prospects. HIML is pleased to report that the share price and NAV per share of HIML’s investment trust and fund are at record levels.

“Looking ahead, we will benefit from Aberdeen’s enhanced marketing reach and endeavour to continue to deliver above average returns for shareholders.”

Commenting on the result, Dan Coatsworth, head of markets at AJ Bell, said: “Herald Investment Trust lives to fight another day. After considerable disruption from activist investor Saba, Herald has struck a deal that will see it reborn under the care of asset manager Aberdeen.”

He added: “Both sides appear to be declaring victory, which is slightly odd. Herald says it has secured its future, while Saba says it has now won six campaigns against UK investment trusts.

“While both sides have got something they want, it still feels like a compromise. Herald continues to operate, but risks giving up some of its assets. Saba bought cheaply and can sell a chunk at fair value, yet the standstill agreement means it is effectively silenced as an activist by Aberdeen.

“The investment trust industry has been tearing its hair out over the activist’s meddling and might think the Herald outcome is the blueprint to follow if it means Saba can eventually go away.”