The proposal is part of a broader agreement that is intended to bring Herald Investment Management Limited’s funds under Aberdeen’s management, including the Herald Worldwide Technology Fund, currently representing combined assets under management of about £1.6 billion ($2.17 billion).

Eight staff, including lead manager Katie Potts, are expected to join Aberdeen, bringing experience in investing across technology, smaller companies and media. The team will relocate to Aberdeen’s London office, and gain access to Aberdeen’s distribution and marketing capabilities.

HRI has announced a proposed tender offer for up to 66 per cent of HRI’s issued share capital, that will allow the largest shareholder, US activist Saba Capital Management, and other HRI shareholders, an exit at close to net asset value (NAV), or to continue their investment in HRI. Saba has undertaken 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 the third quarter of 2026.

As part of this arrangement, Saba has signed a three-year standstill agreement with HRI and Aberdeen Investments, which 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.

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 about £12.5 billion. They will have the option to participate in a similar standstill arrangement should their independent boards decide to do so. The trust is among several UK-listed trusts to have been caught in disputes with Saba.

“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 demonstrate our innovation and commitment to the sector,” Jason Windsor, CEO, Aberdeen Group, said.

“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,” Potts added. “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.”

“This is a successful outcome for shareholders. It’s excellent to see proposals that will allow Herald Investment Trust to continue to deliver strong returns for its shareholders. Herald is a unique investment trust, backing high-growth tech and communications businesses, led by Katie Potts, one of the longest-serving managers in the industry,” Richard Stone, chief executive of the Association of Investment Companies (AIC), said.

“After considerable disruption from activist investor Saba, Herald has struck a deal that will see it reborn under the care of asset manager Aberdeen,” Dan Coatsworth, head of markets at AJ Bell, said.

The Edinburgh Worldwide Investment Trust (EWI) was also recently subject to a hostile campaign by Saba, which holds about 31 per cent of its shares, resulting in the removal of its board last month. The new board, installed by Saba, is expected to shift the focus away from the Edinburgh-based trust's previous growth-tech strategy, managed by Baillie Gifford. “The new board of Edinburgh Worldwide has important legal and regulatory responsibilities to act independently and in the interests of all shareholders. There will be intense scrutiny of their actions and we expect them to follow a proper process if seeking to change the manager or the mandate," Stone said.

"Thousands of shareholders will be disappointed by this announcement, having twice rejected directors nominated by Saba only to see them appointed to the board at the third attempt. The bigger picture here is that a minority shareholder has been able to control the future direction of an investment trust against the wishes of the vast majority of other investors who did not want this outcome. We are seeking changes to the Listing Rules to address gaps that Saba has exposed, and it’s imperative that the government puts in place voting legislation to make sure all shareholders get the information and voting rights they are entitled to," Stone added.