Dundee-based investment group Alliance Trust believes it can beat off an attack by a rebel investor.
The jobs of many of its 300 staff could be at risk if Laxey Partners succeeds in persuading shareholders to replace them with external fund managers.
Alliance was making no official comment, but the 124-year-old group has indicated privately that it is confident it has the right strategy for managing its £2.7bn investment trust, which is one of the UK’s top 100 companies by value.
It saw off a challenge by Laxey on another issue last year and believes its business has changed significantly for the better since then.
The investment trust recently posted annual results that showed it had compared well to competitors in recent months. It also increased the dividend it paid to shareholders, many of whom are private investors.
Laxey owns about 2% of the trust’s shares.
Its chairman Colin Kingsnorth said performance was poor, many changes were being made to the board of directors and there was too big a discount the gap between the share price and the value of the underlying investments the trust holds.
He called on Karin Forseke, Alliance’s incoming chairwoman, to carry out review of the management of the company’s affairs.
”This should explore the possibility of externalising the management contract and determine appropriate actions to further enhance the performance and rating of Alliance to the benefit of all shareholders,” he said.
Laxey reckons that using outside fund managers rather than Alliance’s own team would ”protect shareholders from excessive charging in falling markets and incentivises the manager to maximise the return to shareholders in all market conditions.”
It has support for its case from City analysts Winterflood, who said in the wake of the annual results that shareholders should make a ”hasty exit” as there were other, more attractive investment trusts available.
Alliance’s chief executive Katherine Garrett-Cox, who earned just over £1m in salary, bonus and benefits last year, has admitted demand for its shares needs to be boosted to narrow the discount.
She recently said the trust needed to be more confident about what set it apart from competitors and get more shareholders on board.
It is understood that Laxey is not specifically calling for Ms Garrett-Cox to quit, but believes that her role would be smaller if it gets its way when shareholders vote on its proposal at the trust’s annual meeting in April.