Elliott Advisors fires first shot in war with Alliance Trust as it names City trio for boardComments Off on Elliott Advisors fires first shot in war with Alliance Trust as it names City trio for board
It is the start of one of the biggest battles in the normally sleepy world of investment trusts for several years.
It will see a New York hedge fund which has previously stirred up trouble at National Express, Game Digital and Morrisons pitched against one of the most famous British female financiers, Alliance Trust boss Katherine Garrett-Cox, nicknamed “Katherine the Great”.
The threesome are former BZW and Warburg investment banker Anthony Brooke, former chief executive of Legal & General Investment Management and Framlington Peter Chambers and Rory Macnamara a former corporate financier at Morgan Grenfell and Lehman Brothers.
Elliott said they were selected from a short-list drawn up by headhunters Spencer Stuart and were totally independent having never worked with the New York-based investment fund before.
Elliott wrote to Alliance Trust shareholders saying that as the investment trust’s largest shareholder, with a 12% stake, it was calling for change.
It said: “Our concerns include the persistent underperformance of Alliance Trust’s investment portfolio against its sector peers and relevant benchmarks; the high and inflexible nature of the cost of the trust’s internal investment management function; and the continuing losses in two operating subsidiaries, adding to the total costs borne by shareholders.
As a result, the company has among the highest discounts to intrinsic value among its relevant peers.”
Alliance Trust, which is chaired by Karin Forseke and run by Garrett-Cox, said: “The Board will consider the requisition … and will respond in due course.”
Garrett-Cox also fought against activist shareholder Laxey Partners four years ago when it tried to oust her as investment chief and introduce fund management by third parties.
Elliott has taken a different approach by not calling for Garrett-Cox or Forseke’s removal. Instead it wants its three nominees to bring “new faces and fresh thinking” to the board.
Elliott is taking its fight direct to Alliance Trust’s 50,000-plus private investors who between them own 70% of the equity.
To that end it has launched a website, improvealliancetrust.com, to put over its case. It is also employing shareholder solicitation firm Boudicca Proxy to drum up support.
Alliance Trust was expected to respond in detail shortly and said: “Alliance Trust has strong corporate governance controls in place.”
Shares in Alliance Trust rose 5.88p to 502.68p against its net asset value on Friday of 573.4p — a discount of 12.3%.