Alliance Trust has announced it has entered into an agreement with its largest shareholder, Elliott Advisors, to repurchase all of its ordinary shares in the investment trust representing a 19.75 per cent holding.
If approved by Alliance Trust’s independent shareholders the repurchase will occur after the upcoming general meeting on February 28 in five equal tranches, each of which will be at a 4.75 per cent discount to the prevailing net asset value (NAV) at the time.
In a statement Alliance Trust said: “The board believes that the proposed repurchase is in the best interests of the company and its shareholders as a whole, having regard in particular to the uplift to NAV of approximately 1 per cent, which will accrue to the benefit of continuing shareholders; the ability for the company to move forward with its multi-manager proposal against the backdrop of a share register that is settled and supportive for the longer term; and the fact that the targeted annual costs of the ongoing company will remain competitive, amounting to no more than 65 bps.”
It continued: “Furthermore, the board reaffirms its proactive approach to buy back shares, and going forward is prepared to do so at or around that same level. For these reasons, the board intends to recommend unanimously that shareholders vote in favour of the requisite resolutions to implement these proposals.”
A spokesperson for Elliott stated: “When Elliott became a shareholder over five years ago Alliance Trust had poor corporate governance and its shares traded at more than a 15 per cent discount to NAV. Since then, corporate governance has improved, an external asset manager has been proposed and the discount has narrowed to less than 5 per cent. Elliott welcomes the opportunity to participate in the offer being made to all other shareholders under the buyback programme.”
Following a strategic review Alliance Trust sold its investment arm Alliance Trust Investments to Liontrust and announced a move to a multi-manager model.
However, the broker Numis suggested recently that shareholder approval for the change in strategy was far from guaranteed, with suggestions that Elliott did not back the plan.
Elliott Advisors came to prominence as Alliance Trust’s largest shareholder in 2015 during its battle with the investment company over performance and the need for more independent directors to hold the board to account.
The actions by the activist investor kickstarted a number of changes at the trust, including the departure of chair Karin Forseke, Katherine Garrett-Cox stepping down from the board of the investment trust and later as chief executive of ATI and the implementation of the strategic review.
