Alliance Trust 

Elliott to exit as Alliance Trust investors approve overhaul

Elliott to exit as Alliance Trust investors approve overhaul

Alliance Trust shareholders have backed its proposal to shift to a multi-manager model and to offer activist investor Elliott Advisors an exit from the £3.3bn trust.

At a general meeting today (February 28), 96 per cent of shareholders approved the shift from using an internal global equity team to eight external mandates managed by investment group Willis Towers Watson.

At the same meeting, a share repurchase programme allowing Elliott to sell out of the trust was also approved. Alliance Trust will now purchase the hedge fund's near 20 per cent stake in five tranches, each at a 4.75 per cent discount to the prevailing NAV.

Some shareholder action groups had disapproved of the Elliott exit deal, suggesting the hedge fund was receiving preferential treatment from the board. However, shareholder backing for the move came in at 77 per cent.

Shareholders also approved a further 5 per cent buyback programme on the same terms as Elliott's exit.

The board said: "The board remains committed to its proactive approach to buying back ordinary shares, and going forward is prepared to do so at or around the same discount level as that of the share repurchase from Elliott so long as it is in shareholders' best interests."

Alliance Trust said it expected to convert to its new global equity multi-manager model by April. Jupiter's Ben Whitmore and River & Mercantile's Hugh Sergeant are among eight managers expected to run concentrated portfolios of around 20 stocks each.

Alliance Trust chairman Lord Smith of Kelvin said: "The board is pleased to announce that all resolutions have been passed, and, in particular, is delighted by the 96 per cent level of shareholder support.

"The aim of the new approach is to achieve consistent outperformance at a competitive cost, with a progressive dividend policy."

The changes mark at least a temporary end to years of upheaval at the company, after a period in which Elliott invoked several governance changes, and a strategic review leading to the disposal of Alliance Trust Investments to Liontrust. The trust's size could shrink below £2bn following the hedge fund's exit.