Retail investors ShareSoc support board coup at Alliance Trust

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ShareSoc, which advises retail investors, expressed its support for US hedge fund Elliott Advisors, which hopes to appoint three directors onto the investment trust’s board.

The shareholder group initially backed the proposal by Alliance’s largest shareholder last month, but was criticised by the company for not waiting until it had set out its defence.

Alliance has since claimed that the three men — Anthony Brooke, Peter Chambers and Rory MacNamara — are not independent and has warned that Elliott will use them to “exert undue influence”.

It has also defended its investment performance and claimed its record of paying dividends “is almost unequalled by any FTSE-listed company in the UK”.


However, in a letter to retail shareholders seen by the Evening Standard, ShareSoc said today: “It is difficult to see how Elliott can pursue disruptive action when the potential three new board members will be in a minority on the board and must act independently of Elliott.

“It is hardly in the interests of Elliott to pursue any agenda that might damage the interests of Alliance shareholders as they are shareholders themselves.”

It also criticised the pay handed to chief executive Garrett-Cox and chairman Karin Forseke, advising small shareholders to back the overhaul, which will be voted on at Alliance’s annual meeting in Dundee on April 29.

ShareSoc’s views are important because about 70% of Alliance’s shareholders are retail. Reports by other advisory groups, including Pirc, will be published later this month.

ShareSoc said: “[Alliance Trust’s] rejection of the proposals out of hand seemed unwise and is unfortunately a typical response seen from boards who are reluctant to tackle the key issues when faced by criticism from outside.” 

The three directors proposed by Elliott were found by City headhunter Spencer Stuart. If appointed they are likely to lead a call for change at the £3.6 billion investment trust that could result in its portfolio being managed by an external fund manager like Blackrock, Fidelity or Aberdeen Asset Management.

Garrett-Cox previously saw off an attempt by hedge fund Laxey Partners to overhaul the company’s structure. However, Elliott now controls 12% of its shares, compared to the 1.5% owned by Laxey at the time.

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April 2, 2015 |
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