The board of Alliance Trust will today attempt to face down a rebel shareholder challenge calling for a radical reorganisation of the way in which the firm operates.
The Dundee-based trust the UK’s largest generalist investment vehicle with managed funds of more than £2.9 billion will hold its general meeting in Dundee today determined to defeat the latest resolution which has been raised by Laxey Partners.
The Isle of Man hedge fund manager headed by Colin Kingsnorth was knocked back last year in an attempt to make the trust introduce a formal discount control mechanism which would have regulated the way the organisation buys back its own shares.
Laxey are now seeking a comprehensive review of the operations of the trust, including the possibility of externalising the fund management function.
If investors were to back such a move at the AGM, it would jeopardise dozens of jobs in the Alliance Trust’s headquarters at West Marketgait.
Mr Kingsnorth defended the resolution and said it gives a platform for debate over the company’s future. He insisted the trust is operating at an overall higher cost than its peers a contention Alliance has repeatedly denied and said the company needs to modernise.
”It is a very, very soft resolution,” he said. ”I think things have moved on and a lot of the shareholders are keen to see if there is going to be change. What they’d like to see is some specific, concrete proposals brought forward.”
Brewin Dolphin, one of the largest investment managers for private investors in the UK and a significant shareholder in the Alliance Trust, said it would not be supporting the Laxey resolution.
In her first public move after taking office this month, new chairman Karin Forseke issued a circular to all Alliance shareholders urging them to vote down the resolution.
She said Laxey’s proposals were motivated by the self-interest of short-term investors and said externalising the fund management function would ”negatively impact” the firm’s ability to align the interest of shareholders and investment managers.
The document also said the trust had delivered top quartile investment performance, with a bottom quartile cost base, had narrowed the discount through a £275m share buy-back programme and paid the largest annual dividend in 20 years.
An Alliance Trust spokesman said: ”The board believes it is vitally important that all investors make their voice heard at the AGM. We have listened to our shareholders and will continue to do so as we keep their interests at the forefront of everything we do.”For full coverage of today’s meeting, see Saturday’s Courier