Private Equity Governance and Shareholder Rights in the Age of High-Stakes Tech Bets

The governance dispute between Saba Capital Management and Baillie Gifford over the latter's SpaceX asset sale has ignited a broader debate about accountability, transparency, and shareholder rights in private equity and venture capital. At the heart of the controversy lies a 35% reduction in Baillie Gifford's stake in SpaceX in October 2025-a move Saba, led by activist investor Boaz Weinstein, has labeled "suspiciously timed" and emblematic of a governance failure. This case underscores the challenges of balancing institutional interests with shareholder accountability in high-stakes technology investments, a sector increasingly defined by opaque valuations and speculative growth narratives.

The Governance Critique: Timing, Valuation, and Board Independence

Saba Capital has accused Baillie Gifford's Edinburgh Worldwide Investment Trust (EWIT) of prioritizing its own interests over those of shareholders by executing the SpaceX sell-down just two months before a scheduled revaluation of the asset. This timing, Saba argues, appears designed to manipulate the valuation of the remaining stake ahead of a proposed merger with Baillie Gifford US Growth Trust, which also reduced its SpaceX position by nearly 49% during the same period. The hedge fund has called for full transparency regarding the rationale behind the decision, emphasizing that such a critical move should have involved greater shareholder consultation.

The governance concerns extend beyond timing. Saba has criticized EWIT's board for lacking independence, with directors like Jonathan Simpson-Dent accused of acting as agents of Baillie Gifford rather than stewards of shareholder interests. The firm has renewed its push to replace the board with three of its own nominees, citing "unprecedented value destruction" over the past five years and a failure to deliver adequate returns. EWIT, however, has pushed back, demanding Saba clarify whether it intends to alter the trust's investment strategy or manager. This standoff reflects a broader tension in private equity governance: the balance between institutional control and shareholder empowerment.

Industry Context: Evolving Standards in Tech-Driven Investments

The SpaceX dispute must be contextualized within the evolving landscape of private equity and venture capital governance. By 2025, regulatory pressures-particularly from the SEC-have intensified demands for transparency in private market valuations, fees, and ESG claims. Technological advancements, such as AI-driven due diligence tools and predictive modeling, are also reshaping how firms assess and monitor high-growth tech investments. Yet, as the Baillie Gifford case illustrates, gaps persist in aligning these innovations with robust governance frameworks.

In the tech sector, where valuations often hinge on speculative growth metrics rather than tangible cash flows, the need for rigorous oversight is acute. For instance, the surging demand for AI and data-center infrastructure has driven M&A activity, but it has also amplified risks of overvaluation and capital misallocation. Baillie Gifford's own approach to tech investments- emphasizing long-term horizons and structural growth drivers-highlights the tension between patience and the pressure to deliver short-term returns. The firm's 34.9% allocation to private tech investments as of May 2025 further underscores the stakes involved.

Shareholder Activism and the Push for Accountability

Saba's campaign against EWIT is part of a growing trend of shareholder activism in private equity. Activist investors are increasingly leveraging their stakes to demand board-level changes, transparency, and performance improvements. Saba's 30% ownership in EWIT, for example, grants it the right to convene a shareholder vote-a tactic it previously attempted in February 2025, albeit unsuccessfully. This reflects a broader shift in shareholder rights, where investors are no longer passive observers but active participants in governance.

The legal landscape has also evolved to support such activism. In the U.S., antitrust enforcement under Section 8 of the Clayton Act has intensified, compelling private equity firms to scrutinize cross-portfolio board roles and ownership structures. These developments signal a maturing industry where governance failures-such as those alleged in the SpaceX case-are increasingly subject to scrutiny and corrective action.

Valuation Transparency: A Critical Frontier

Transparency in valuing tech assets remains a contentious issue. Baillie Gifford's US Growth portfolio, for instance, has navigated the challenge of distinguishing between genuine value creation and speculative overvaluation. While the firm has avoided overexposure to high-risk segments like AI-driven data centers, it has maintained a focus on companies with durable competitive advantages. However, Saba's criticisms highlight the risks of opaque valuation practices, particularly when decisions are made without shareholder input.

The broader industry is grappling with similar challenges. As noted in 2025 private equity trends, the rise of sector-focused funds-especially in technology-has enabled deeper expertise but also raised questions about how valuations are determined and communicated to stakeholders. The SpaceX case exemplifies the need for standardized frameworks that ensure valuation methodologies are both rigorous and transparent.

Conclusion: Governance as a Competitive Advantage

The dispute between Saba and Baillie Gifford is more than a corporate squabble; it is a microcosm of the governance challenges facing private equity and venture capital in the age of high-stakes tech bets. As institutions like Baillie Gifford navigate the complexities of managing speculative assets, the lessons from this case are clear: governance must evolve to prioritize transparency, board independence, and shareholder engagement. For investors, the takeaway is equally important-activism and accountability are no longer optional but essential components of a resilient investment ecosystem.

In an industry where the line between innovation and speculation is increasingly blurred, robust governance is not just a compliance requirement-it is a competitive advantage.