The City minister has offered to meet the chair of Baillie Gifford’s US Growth to discuss potential safeguards for the investment trust industry, after the FTSE 250 trust was swept up in a years-long activist campaign waged by US hedge fund Saba Capital.

Lucy Rigby is hoping to meet US Growth (USA) chair Tom Burnet to hear measures he believes would help protect London’s closed-end funds from an onslaught of investor activism that has uprooted the industry.

In a letter seen by , the Treasury minister hailed the “important role investment companies… play in bringing transformational new innovations to customers and markets, and driving economic growth”. She added that her officials were in touch about a meeting with Burnet, to provide “an opportunity to discuss your concerns in more detail”.

Rigby’s letter follows USA, whose portfolio is a hybrid of high-growth public and private companies, successfully fending off Saba’s third attempt to take control of the trust.

The New York hedge fund run by Boaz Weinstein had called for an overhaul of the Baillie Gifford-run trust’s governance and tried to install three directors to its board at a crunch vote last month.

The vehicle’s army of retail investors roundly rebuffed the activist’s advances, with over 99 per cent of shareholders not affiliated to Saba voting against the hedge fund’s resolutions. But the overall vote was only won by a narrow margin given the outsized sway Saba and ally Sessa Capital had over the shareholder register and concerns over retail investor turnout.

The meeting represented the third major Saba-proposed showdown in under two years and was one of dozens of votes called as part of the fund’s wider campaign on Britain’s investment trust sector.

Baillie Gifford calls for ‘swift action’ on investment trusts

In a letter to Rigby ahead of last month’s vote, also seen by , Burnet sounded the alarm over the threat the tactic poses to the “integrity of the broader UK investment trust sector and UK public equity markets”.

“Without swift action, more investment trusts will fall pray to such tactics, and the ordinary savers who rely on them will be the ones who suffer,” he added.

Burnet proposed several measures to safeguard the industry from future campaigns, including bolstering scrutiny of activist shareholders’ communications and eradicating barriers to shareholder voting. He also urged the City minister to throw her weight behind a Financial Conduct Authority (FCA) consultation into the closed-end fund’s exposure to activist campaigns. The City watchdog is due to announce any proposed changes by early next year.

In her response, Rigby said she was “looking forward to seeing” the FCA’s consultation response and that the government was “committed to making it easier for shareholders to vote”.

While Weinstein lost the vote on the future of the FTSE 250-listed USA Growth, his hedge fund has successfully engineered significant changes at other major investment trusts. Another Baillie Gifford-run trust, Edinburgh Worldwide, folded after a similarly protracted campaign, along with the likes of Herald and Impax Environmental Markets.

The Treasury declined to comment.