Secured Future for Herald

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION (EU) NO 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

7 May 2026

For immediate release

HERALD INVESTMENT TRUST PLC

(the "Company" or "Herald")

Secured Future for Herald with Katie Potts and Aberdeen, Agreement with Saba and Proposed Tender Offer at close to the NAV per Share

Highlights

· Heads of terms agreed to appoint Aberdeen Investments(1) as the Company's AIFM, with Katie Potts continuing as the Company's investment manager - there will be no change to the Company's investment mandate.

· Proposed tender offer for up to 66 per cent. of the Company's issued share capital, with options for entitlements to be satisfied 33 per cent. in specie or 33 per cent. for cash.(2)

· Saba to elect to exit Herald in full in the Tender Offer. (3) Saba has entered into an irrevocable undertaking and standstill agreement for a period of three years.(4)

· Saba's election for the in specie option increases capacity for other shareholders to choose the cash option, guaranteeing at least a c. 51 per cent. cash exit opportunity, with potential for significantly more depending on overall take-up.

· Aberdeen has committed to use the initial six months of management fee income received from Herald to make market purchases of shares, aligning Aberdeen with the Company's shareholders.

Introduction

The board of Herald (the "Board") is pleased to announce that it has agreed heads of terms with Herald Investment Management Limited ("HIML"), the Company's current alternative investment fund manager ("AIFM"), and Aberdeen Investments(1) (together with other members of its group, "Aberdeen") in respect of a proposed tender offer (the "Tender Offer") and proposed changes to the Company's management and administrative arrangements (together with the Tender Offer being the "Proposals"). In connection with the Proposals, the Board is also pleased to announce that it has entered into an irrevocable undertaking and a three year standstill agreement with Saba Capital Management, L.P. ("Saba", including funds, accounts and investment vehicles managed, advised or sub-advised by Saba or any of its affiliates where applicable, but excluding any investment companies from time to time registered under the U.S. Investment Company Act of 1940, as amended which are managed by Saba or any of its affiliates).(4)

The Board believes the Proposals, which are supported by Saba, provide a stable foundation for the Company's future growth. The Company's shareholders ("Shareholders") who wish to stay invested will continue with the current investment manager, Katie Potts, and the existing proven and highly successful investment strategy. At the same time, the Proposals offer Shareholders a significant exit opportunity, should they wish it, at close to the net asset value ("NAV") per share as at the time of the exit.

The Tender Offer will be for up to 66 per cent. of the Company's ordinary shares (the "Shares"), with an option to elect for entitlements to be satisfied in specie or for cash (with each option capped at 33 per cent. of the Shares in issue, save as increased to the extent that the other option is not fully utilised).(2) 

It is proposed that, following the completion of the Tender Offer, the appointment of HIML as the Company's AIFM will be novated (or terminated) and Aberdeen will be appointed in its place. Katie Potts, the Company's investment manager, and a number of investment professionals and other current HIML employees will then become employees of Aberdeen.

The Board believes the Proposals will deliver the following significant benefits for Shareholders:

· Choice for Shareholders: Eligible Shareholders will have the choice of remaining invested in the Company, with Katie Potts as the investment manager, or electing for an exit at close to the NAV per Share at the time of such exit. Long-term Shareholders, who have benefitted from the Company being one of the investment trust sector's top 20 performers in share price total return terms over the past decade, can avoid crystallising an unwanted tax event by continuing to hold their Shares.

· Continuity of management and investment process: The Company will continue to be managed by Katie Potts, supported by individuals joining Aberdeen from HIML. The management team will employ the same proven investment strategy that has delivered a 3,437 per cent. NAV total return from the Company's inception.(5) Shareholders who remain invested in the Company will not bear any direct costs of the Tender Offer in respect of their continuing investment.

· Significant liquidity opportunity at close to the NAV per Share: Eligible Shareholders will have an opportunity to exit part of their investment in the Company, with entitlements settled either in specie or for cash consideration, with the ability to over-elect. With Saba holding approximately 30 per cent. of the Company's Shares, and electing for the in specie option, the cash option will effectively represent a minimum c.51 per cent. exit opportunity for those Shareholders who wish to elect in full for cash, with potential for significantly more depending on overall take-up (noting that the minimum 51 per cent. would be in the scenario where every Shareholder, with the exception of Saba, elected in full for the cash exit).

· No wholesale forced realisation: The in specie option reduces the extent of the realisations required from the Company's portfolio, and therefore the impact on value for both continuing and exiting Shareholders, relative to the other options available to the Company. The requirement for further substantial realisations to fund the Tender Offer is also lessened by the fact that the Company currently holds c.23.5 per cent. of its portfolio in cash and cash equivalents.(6)

· Strategic reset: Reaching agreement among differing groups of Shareholders will enable the investment manager to focus once again on making long-term investments in pursuance of the Company's objective, whilst also removing an obstacle to attracting new Shareholders. There is no guarantee that the other solutions considered would have commanded sufficient votes to be adopted, potentially prolonging the damaging impasse or leading to a solution less attractive to all Shareholders.

· Platform for future growth: The appointment of Aberdeen as AIFM offers Shareholders significant benefits, in addition to being critical to unlocking a deliverable solution for all Shareholders. Aberdeen's considerable resources and experience within the listed funds sector, together with its marketing expertise, provide a strong platform to enable Herald to continue providing Shareholders with access to attractive long-term investment opportunities.

Implementation of the Proposals remains subject to, among other things, Shareholder approval of the Tender Offer and the agreement of binding documentation between Aberdeen, HIML and Herald in respect of the proposed changes to the Company's management arrangements.

Background to the Proposals

The Board has always aimed to serve the interests of all Shareholders, while recognising that differing groups of Shareholders have, in recent years, had different objectives for their investments.

The Board therefore, having reviewed a number of options, proposed a 100 per cent. tender offer, as first announced on 9 January 2026. This tender offer was cancelled as there was not sufficient Shareholder support. The Board then began preparations for another 100 per cent. tender offer, but with a 50 per cent. vote requirement and no condition for Saba to tender (the "Backstop Tender Offer"). Concurrently, as announced on 3 February 2026, constructive dialogue has been ongoing in an attempt to find a solution that would be in the best interests of Shareholders and the Company as a whole.

The Board understood from discussions with Shareholders that many would like to remain invested in the Company's current mandate, given the very strong long-term performance of Herald, which has delivered a 3,437 per cent. NAV total return since inception.(5) Furthermore, many Shareholders have significant capital gains on their holdings. The Board is conscious that, should the Company have proceeded with the Backstop Tender Offer, these Shareholders would have been faced with a choice of realising these gains in the Backstop Tender Offer, which would crystallise an unwanted tax event, or keeping their investment in what may have become a Saba managed and controlled vehicle with a different investment mandate.

The Board therefore believes that a solution supported by Saba, which offers both a significant exit at close to the NAV per Share for all Shareholders along with a viable continuation option managed by the incumbent investment manager, is in the best interests of Shareholders as a whole.

The Proposals allow the Company's investment manager, Katie Potts, to once again commit fully to making long-term investments into promising technology and communications companies, in line with the strategy's successful long-term investment horizon. The Proposals also increase the ability for the Company to attract new long-term Shareholders.

Having agreed the irrevocable undertaking and standstill with Saba, and heads of terms with HIML and Aberdeen, the Board will now turn to negotiating definitive transaction documentation in respect of the proposed management arrangements whilst preparing the shareholder circular in respect of the Tender Offer (the "Circular").

The Circular, currently expected to be posted around the end of May, will set out the full terms and conditions of the Tender Offer and the action to be taken by those wishing to tender their Shares. The Circular will also include notice of a general meeting of the Company, at which Shareholders will be asked to approve the Tender Offer (the "General Meeting").

Tender Offer summary

It is expected that the Tender Offer will be made for up to 66 per cent. of the Shares in issue as at a record date to be determined by the Company (the "Record Date").

The Tender Offer will comprise:

· an option for Qualifying In Specie Shareholders (as defined below) to have their entitlement to consideration for their tendered Shares satisfied through arrangements pursuant to which they acquire portfolio assets of the Company of equivalent value (the "In Specie Option"), limited to 33 per cent. of the Shares in issue(2) (save as increased to the extent that the Cash Option is not fully utilised); and

· an option for Eligible Shareholders (as defined below) to receive cash consideration for their tendered Shares (the "Cash Option"), also limited to 33 per cent. of the Shares in issue(2) (save as increased to the extent that the In Specie Option is not fully utilised).

Shareholders, excluding sanctions restricted persons and certain overseas Shareholders, whose names appear on the Company's register of members as at the Record Date ("Eligible Shareholders") will be entitled to tender their Shares pursuant to the Cash Option or, subject to meeting the additional eligibility criteria to be set out in the Circular, pursuant to the In Specie Option (with Eligible Shareholders who meet such additional criteria being "Qualifying In Specie Shareholders"). Qualifying In Specie Shareholders may, in respect of the interests of an underlying beneficial owner of Shares, only elect for either the In Specie Option or the Cash Option in respect of such beneficial interests.

Eligible Shareholders will be entitled to elect for the Tender Offer in respect of their entire holding of Shares. However, a scaling back exercise will be conducted if aggregate elections for the Tender Offer as a whole exceed 66 per cent. of the Shares in issue.

As Saba has committed to elect for the In Specie Option for its entire holding, which represents around 30 per cent. of the Shares in issue, it is expected that Eligible Shareholders electing for the Cash Option will be able to successfully tender significantly more than their basic entitlement. For purely illustrative purposes, should every Shareholder apart from Saba over-elect for the Cash Option in respect of their entire holding, and assuming all elections are valid, all such Shareholders would be able to realise around 51 per cent. of their holding. In practice, as the Board believes many Shareholders will wish to remain invested with the Company, this may be a material overestimate of the likely elections (which would create further capacity for over-elections).

In total, no more than 66 per cent. of the Shares in issue will be bought back pursuant to the Tender Offer. Notwithstanding that overall limit:

· If fewer than 33 per cent. of the issued Shares are validly tendered for the In Specie Option, and the Cash Option is oversubscribed, the total number of Shares that can be bought back pursuant to the Cash Option will be increased by the remaining capacity under the In Specie Option.

· If fewer than 33 per cent. of the issued Shares are validly tendered for the Cash Option, and the In Specie Option is oversubscribed, the total number of Shares that can be bought back pursuant to the In Specie Option will be increased by the remaining capacity under the Cash Option.

Any such increased capacity under the Tender Offer will be allocated amongst all Shareholders who have validly elected for the relevant option in excess of their basic entitlement in a manner which is, as near as practicable, pari passu and pro rata among all such Shareholders.

Tender Offer pricing

The tender prices for the Cash Option and the In Specie Option will be adjusted down for all costs and expenses paid or payable by the Company in respect of the Tender Offer (excluding portfolio realisation costs and with portfolio transfer costs only being applied against the In Specie Option) together with any applicable VAT (together, the "Costs") in proportion to the number of Shares validly tendered for the Cash Option or In Specie Option (as applicable), after any scaling back exercise. Shareholders who remain invested in the Company will not bear any direct costs of the Tender Offer in respect of their continuing investment.

The tender price for the Cash Option will be equal to the NAV per Share as at a calculation date to be determined by the Company (the "Calculation Date") (adjusted to take account of any Costs already incurred or accrued in the NAV at that time) less (i) a discount of 2 per cent. (the "Cash Option Discount"); and (ii) the proportionate Costs allocated to each Share successfully tendered for the Cash Option. The Cash Option Discount has been applied to reflect an estimate of the cost it would take Shareholders electing for the In Specie Option to realise the underlying portfolio quickly, including transfer or registration taxes and custody costs.

The tender price for the In Specie Option will be equal to the NAV per Share as at the Calculation Date (adjusted to take account of any Costs already incurred or accrued in the NAV at that time) less (i) the proportionate Costs allocated to each Share successfully tendered for the In Specie Option; and (ii) the proportionate allocation of any stamp duty, stamp duty reserve tax and transfer or registration taxes (whether UK or non-UK)), as applicable, on the value (as at the Calculation Date) of the securities to be transferred pursuant to the In Specie Option which the Company is required to pay as transferor.

A Shareholder electing for the In Specie Option will also bear any stamp duty, stamp duty reserve tax and transfer or registration taxes, as appropriate, in relation to any assets transferred to them and which they are required to pay as transferee.

Pursuant to the Standstill Agreement (as defined below), Saba has agreed to elect to tender its Shares in full for the In Specie Option.

Future investment management arrangements

Following the completion of the Tender Offer, it is intended that Herald will appoint Aberdeen as its AIFM, pursuant to a new or novated investment management agreement, on terms substantially consistent with existing arrangements (which include provision for Aberdeen to provide company secretarial and administration services). It is also intended that, in the event the Company's current investment management agreement with HIML is terminated and replaced with a new agreement with Aberdeen (rather than being novated), HIML will agree to waive any compensation that would otherwise be payable in lieu of notice for such termination.

A number of HIML employees who are currently involved in the day-to-day management and administration of the Company are expected to transfer to Aberdeen as part of a transfer of HIML's business and undertaking to Aberdeen. This group includes Katie Potts, who will remain as the Company's investment manager, and a number of her current investment management team. There will be no changes to the Company's investment mandate, benchmarks or management fee rates.

Following a minimum initial period of 18 months, the investment management agreement with Aberdeen shall be terminable by either party by serving six months' notice. Aberdeen intends to use the initial six months of management fee income received from Herald to make market purchases of Shares.

The Herald Worldwide Technology Fund, an open-ended fund currently managed by HIML, also intends (subject to regulatory permissions), to change its AIFM to Aberdeen.

Appointment of Aberdeen

The Board believes that the appointment of Aberdeen will bring Shareholders significant benefits. The costs of running Herald's strategy, coupled with a greater requirement for marketing to attract new Shareholders, mean that it is increasingly challenging to run a smaller fund such as the continuing Herald cost-effectively. Following the Tender Offer, the Company's fixed costs will necessarily be spread across a smaller cost base.

With the appointment of Aberdeen, Shareholders are expected to benefit from the significant economies of scale and resources available through Aberdeen, whilst also being able to retain the investment expertise of Katie Potts and a number of her current team at HIML.

The Board believes that the following benefits are particularly significant:

· Scale and experience: Aberdeen is the fifth largest manager of listed closed end funds in the world with a very long-standing focus on investment companies, which are the origins of Aberdeen's investment business. This scale is expected to offer numerous operational synergies and benefits to Herald. Aberdeen has a huge amount of experience in managing investment trusts and is well placed to support Herald on a path to growth.

· Investment resources: Aberdeen has highly complementary equity investment resources, in particular Aberdeen's highly-rated Asian Smaller Companies investment team, which specialises in a region of growing importance for Herald.

· Dedicated marketing and sales team: Aberdeen has a specialist and dedicated investment trust sales team as well as offering award winning marketing and PR support.

· Strong alignment: Aberdeen has committed to use the initial six months of management fee income received from Herald to make market purchases of Shares, aligning Aberdeen with Shareholders.

· Enhanced direct-to-retail marketing opportunity: ability to market at scale through interactive investor. interactive investor ('ii'), an Aberdeen group company, is one of the UK's largest (and fastest growing) direct-to-consumer investment platforms, with around £15 billion invested through the platform in UK investment trusts.

Agreement with Saba

On 7 May 2026, Saba entered into a three-year irrevocable undertaking and standstill agreement with Aberdeen and Herald (the "Standstill Agreement").(4)

Pursuant to the Standstill Agreement, Saba has committed to vote in favour of the Tender Offer at the General Meeting and elect to tender its shareholding in full for the In Specie Option. In addition, Saba has agreed to give a number of undertakings to the Company that apply for the duration of the Standstill Agreement, including as set out below:

· Saba will not put forward any proposals to Shareholders or requisition any resolution or general meeting of the Company;

· Saba will not seek to change the composition of the Board;

· Saba will not seek to control or influence the Board or Company or the policies or management of the Company;

· Saba will not vote against the recommendation of the Board on any resolution put to a general meeting of the Company's shareholders (including at the Company's forthcoming 2026 annual general meeting (the "2026 AGM")); and

· Saba will not engage, directly or indirectly, in any short selling of the Shares.

Provided (unless otherwise agreed between the parties) the current expected timetable for the publication of the Circular is met and the Proposals are implemented by no later than 30 September 2026, the Standstill Agreement will remain in place until conclusion of the Company's annual general meeting to be held in 2029 (or, if earlier, the date on which Aberdeen ceases to be appointed as the Company's AIFM). The Standstill Agreement does not restrict or prohibit Saba's ability to vote in favour of or accept any takeover offer for the Company, nor does it restrict Saba's ability to deal in Shares (other than in any short selling) following the Tender Offer.

Expected timetable

It is currently expected that the Circular and notice of the General Meeting will be published towards the end of May, with the Tender Offer launched at the same time. The Board expects to hold the General Meeting to approve the Tender Offer, together with the 2026 AGM, towards the end of June. If the Tender Offer is approved, and becomes unconditional in all respects, it is expected to complete in July.

Implementation of the Tender Offer remains conditional on, among other things, the agreement of definitive documentation between Aberdeen, HIML and the Company in respect of the change of investment management arrangements (and such documentation having become unconditional in all respects, save for certain procedural requirements).

Subject to necessary approvals and finalisation of transitional arrangements, the change of investment management arrangements is expected to take effect at the start of August.

Andrew Joy, Chairman of Herald Investment Trust plc, commented:

"I am delighted that agreement has been reached for Herald Investment Trust to continue with its successful investment mandate, and end the impasse between different groups of its shareholders. This will be welcomed by our long-term investors, who look forward to the chance of continuing to enjoy strong returns. At the same time, Herald is offering a tender which will facilitate shareholders who do not wish to remain invested for the long term, to reduce their holdings at close to the NAV per share. Saba has agreed to elect for a full exit, and to sign a standstill agreement. Herald's management contract is being transferred to Aberdeen who are very pleased to be welcoming Katie Potts and members of Herald's investment team. This will deliver continuity of investment manager, of investment approach and of mandate within the Aberdeen business which will in turn contribute significant resources to support Herald's continued success. Through these proposals, Herald can continue as a leading investor in small cap tech and communication stocks globally, which represent a large and underserved investment opportunity."

"In all the circumstances, this is good news for shareholders, whether continuing or exiting, for the City of London and for tech companies, including portfolio companies here in the UK."

Christian Pittard, Managing Director of Corporate Finance and Head of Investment Trusts, Aberdeen Investments, commented:

"As smaller companies specialists with a proud heritage in investment trusts, I am pleased these arrangements seek to preserve the future of one of Britain's best known investment trusts and allows the HIML team to keep doing what they do best. We would like to thank the Board for their confidence in proposing to appoint Aberdeen as manager of one of the jewels in the investment trust sector's crown."

Katie Potts, Founder of Herald 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."

"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 will endeavour to continue to deliver above average returns for shareholders."

Enquiries:

Notes

(1) abrdn Fund Managers Limited is the legal entity, with Aberdeen Investments being the client facing brand. 

(2) As at the Record Date (excluding any Shares held in treasury).

(3) Excludes any Herald shares held by investment companies from time to time registered under the U.S. Investment Company Act of 1940, as amended which are managed by Saba Capital Management, L.P. or any of its affiliates.

(4) Until conclusion of the Company's annual general meeting to be held in 2029 (provided that Aberdeen Investments(1) has been appointed as the Company's AIFM prior to 30 September 2026 and, following such appointment, continues as AIFM for the duration of this period).

(5) Calculated to 5 May 2026. The past performance of the Company should not be used as a guide to its future performance.

(6) Based on the Company's portfolio as at 30 April 2026.

Important information

The person responsible for arranging for the release of this announcement on behalf of the Company is NSM Funds (UK) Limited, the company secretary.

The Company's LEI number is 213800U7G1ROCTJYRR70.

NOTICE TO U.S. SHAREHOLDERS

The Tender Offer relates to securities of a non-U.S. company listed on the London Stock Exchange and is subject to the disclosure requirements, rules and practices applicable to companies listed in the United Kingdom, which differ from those of the United States in certain material respects. A circular will be prepared in accordance with UK style and practice for the purpose of complying with the laws of England and Wales and the rules of the FCA and of the London Stock Exchange. The Tender Offer is not subject to the disclosure or other procedural requirements of Regulation 14D under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Tender Offer would be made in the United States pursuant to Section 14(e) of, and Regulation 14E under, the Exchange Act, subject to the exemptions provided by Rule 14d-1(d) thereunder, and otherwise in accordance with the requirements of the rules of the FCA and the London Stock Exchange. Accordingly, the Tender Offer would be subject to disclosure and other procedural requirements that are different from those applicable under U.S. domestic tender offer procedures and law. The Company is not listed on an American securities exchange, is not subject to the periodic reporting requirements of the Exchange Act and is not required to, and does not, file any reports with the SEC thereunder.

It may be difficult for U.S. shareholders to enforce certain rights and claims arising in connection with the Tender Offer under U.S. federal securities laws, because the Company is located outside the United States, and its officers and directors reside outside the United States. It may not be possible to sue a non-U.S. company or its officers or directors in a non-U.S. court for violations of U.S. securities laws. It also might not be possible to compel a non-U.S. company or its affiliates to subject themselves to a U.S. court's judgment.

To the extent permitted by applicable law and in accordance with normal UK practice, the Company, J.P. Morgan Securities plc (which conducts on its UK investment banking activities as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove"), Singer Capital Markets Securities Limited ("Singer Capital Markets") or any of their respective affiliates may make certain purchases of, or arrangements to purchase, shares of the Company outside the United States, other than pursuant to the Tender Offer, before or during the period in which the Tender Offer remains open for acceptance, including sales and purchases of shares effected by J.P. Morgan Cazenove and/or Singer Capital Markets acting as market maker in the shares.