Saba Capital Management, the New York hedge fund pursuing the UK’s investment trusts, is to tender a significant stake in the European Smaller Companies Trust.

It follows constructive negotiations with the board and the trust will conduct a tender offer for up to 42.5% of the ordinary shares in issue.

This provides shareholders who wish to exit their investment in ESCT an opportunity to do so.

ESCT becomes the fifth trust of those targeted by Saba to agree to its terms. Saba said it “remains committed to advancing outcomes that enhance liquidity, improve governance and deliver long-term value for all shareholders.”

Boaz Weinstein, founder and chief investment of Saba, commented: “We are pleased to have reached a constructive agreement with ESCT’s Board that puts shareholders first.

“From the outset, our objective has been clear: to unlock value for shareholders across the U.K. investment trust sector. Today’s agreement marks a significant step in that direction, providing those ESCT shareholders that wish to exit their investment with the opportunity to do so through a substantial tender offer.”

The latest deal follows Saba’s failure to take control of an initial batch of seven trusts, including two managed by Baillie Gifford.

The tender offer will be available to eligible shareholders on the register of members of ESCT as at 6pm on 16 April and will include a cash exit option and an in specie consideration option.