Baillie GiffordMar 21 2023

Chair of Scottish Mortgage steps down after criticism

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Chair of Scottish Mortgage steps down after criticism
Baillie Gifford's headquarters in Edinburgh, Scotland (Robert Ormerod/Bloomberg)

The chair of Baillie Gifford’s flagship investment trust has stepped down, less than a week after a former director criticised her tenure at the firm.

Fiona McBain will step down from the board of the Scottish Mortgage Investment Trust at the company’s annual general meeting, expected to be in June this year, according to an announcement to the stock exchange this morning (March 21).

Justin Dowley, currently a senior independent director, will take over as chair of the trust, and Patrick Maxwell will succeed Dowley, both subject to re-election by shareholders.

Paola Subacchi will retire from the board alongside McBain, who has been on the board for 14 years, and Amar Bhidé has left the board, which is undertaking a recruitment process.

The board said these changes are part of succession planning that had been developed and supported by all directors over the past 12 months.

On Friday (March 17), Scottish Mortgage was forced to deny that Bhidé had left the board, after he told the Financial Times he was asked to resign.

Bhidé said he had clashed with McBain during a meeting over the process to appoint two new board members, and his concerns over the trust’s exposure to unlisted assets.

He said he was concerned that nobody on the board has any professional investment experience, and criticised McBain for a lack of independence.

Bhidé focused on the trust’s exposure to illiquid, private assets, saying he does not think the trust has the capabilities or governance to monitor these investments.

The trust has 26 per cent of its portfolio in private companies, just below its own limit of 30 per cent.

Last year, Baillie Gifford increased the amount of unlisted assets its trusts could hold, and last September Scottish Mortgage’s co-manager, Tom Slater, defended the trust’s private asset exposure, saying it is not an “early-stage” investor, and only gets involved once businesses have already achieved “reasonable success”.

He highlighted that companies are taking longer to list means that if the trust did not invest in private assets it would miss out on the “rapid growth” of these companies.

“I don’t see investing in the sector as being riskier than in public stocks,” he said.

The trust’s share price has fallen 34 per cent in the past year as higher interest rates have depressed the valuations of many of the companies it holds. 

Its long-term manager, James Anderson, who spent two decades running the trust, left in April last year. 

He was replaced by co-manager Tom Slater, who has shared the role since 2015, and Lawrence Burns, who had previously co-managed Baillie Gifford’s international concentrated growth strategy.