Investments  

Top names leave in Alliance Trust board shake-up

Top names leave in Alliance Trust board shake-up

Alliance Trust has written to its shareholders outlining “significant” changes to the business, which includes Katherine Garrett-Cox stepping down from the board.

It follows a lengthy battle over the composition of the board with activist shareholder Elliott Advisors.

Ms Garrett-Cox, who joined the board eight years ago, will continue as chief executive and a director of ATI.

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A statement to the market on 1 October also revealed that the chief financial officer, Alan Trotter, has “left to pursue other opportunities in a publicly listed company elsewhere”.

Other changes include an increased focus on global equities, with the trust’s fixed income, legacy mineral rights and property assets to be disposed of “as soon as practicable”.

In addition, the MSCI All Country World Index will be introduced as a formal benchmark.

Alliance Trust will also target an ongoing charges ratio of 45bps or less by the end of 2016 compared with 60bps in 2014, along with a cost-reduction programme of £6m.

The changes are expected to take place as soon as possible, but no later than March 2016. Karin Forseke, chairman of Alliance Trust, said ATI expected to achieve monthly profitability by the end of 2016.

She said: “In the run-up to our AGM, many of our shareholders indicated that they sought change. We have carefully considered the feedback we received and this is reflected in this announcement.

“These actions represent some of the biggest changes in our history and are designed to further improve shareholder value.”

Analyst view

An analyst’s note from Numis said: “These changes are more radical than we had expected, and we believe that they will be welcomed by shareholders.

“There will now be a much clearer mandate for the fund, which will be focused solely on global equities, albeit that the Sustainable and Responsible Investment focus is still not explicit.”

Timeline

■ 1888: Alliance Trust formed through the merger of three Dundee-based companies.

■ 2008: Katherine Garrett-Cox becomes chief executive of Alliance Trust, having previously been chief investment officer.

■ 2011: US hedge fund Elliott Advisors declares a 3 per cent stake in Alliance Trust.

■ 2012: This is increased to a 5 per cent stake.

■ 2014: Elliott declares a holding of 10.6 per cent in Alliance Trust.

■ 16 March 2015: Elliott calls for three new non-executive directors to be appointed to the Alliance Trust board at the upcoming AGM because of its underperformance.

■ 20 March 2015: Alliance Trust tells shareholders to vote against the proposal, kicking off a war of words between the two camps which rumbles on for weeks.

■ 7 April 2015: Several other shareholders, including Tilney Bestinvest and Axa, say Elliott has a case about Alliance Trust’s performance, but stop short of endorsing its activism.

■ 20 April 2015: DC Thomson, the third largest shareholder, announces it will back Alliance Trust at the looming AGM.

■ 28 April 2015: Alliance Trust and Elliott reach a deal on the day before the AGM whereby two of the three non-executive directors are to be appointed while Elliott withdraws its motion and does not agitate against the company until after the 2016 AGM at the earliest.