Hedge fund Elliott Advisors has called for three new non-executive directors to be called to the board ahead of the upcoming annual general meeting.
The hedge fund, which is the largest individual shareholder in Alliance Trust, with a 12 per cent stake, said it was concerned about Alliance Trust’s underperformance against its peers and benchmark as well as the cost of the trust’s internal management and the fact the trust’s subsidiaries are loss-making.
Elliott Advisors has proposed Peter Chambers, former chief executive officer at L&G Investment Management, Anthony Brooke, previously an executive at SG Warburgs and Rory Macnamara, the current chairman of the Dunedin Income Growth trust.
The trust’s shares are trading at a 14.6 per cent discount to the net value of the trust’s assets, which is one of the higher discounts in the Global sector,
Elliott said: “We believe that the board’s failure to address these concerns, and fulfil the company’s full potential, is indicative of a system of corporate governance which requires new impetus.”
The annual general meeting is scheduled for April 29.
A spokesperson for Alliance Trust said: “The board will consider the requisition put forward, as it would any proposal made by a shareholder, and will respond in due course.
“Alliance Trust has strong corporate governance controls in place and has an effective and committed board of directors.
“We remain entirely focused on running the business, delivering investment performance and acting in the best interests of all of our shareholders with a focus on the long-term.”
Criticism of boards has picked up in the investment trust industry of late and Jason Hollands, a managing director of Tilney Bestinvest expects it to continue.
He said: “Following on from the recent targeting of Electra Investment Trust by Edward Bramson’s Sherborne Investors, it’s very clear that activists believe there are currently opportunities in the investment trust industry.
“This will undoubtedly be focusing the minds of Boards across right across the industry, especially those trading on deep discounts.”
