Hedge fund Laxey Partners in vow to fight on at Alliance Trust
The hedge fund agitating for a sweeping overhaul of Alliance Trust vowed to continue its fight even if shareholders fail to back its call for a formal share buy-back programme at the investment group.
Laxey Partners said it would seek to bring in an external team to manage Alliance Trust’s funds if its proposals are rejected at the group’s annual general meeting in two weeks’ time.
This would effectively render a raft of Alliance Trust’s top executive surplus to requirements.
Laxey boss Colin Kingsnorth is unhappy at the performance of the Alliance Trust share price, which has persistently traded at a sharp discount to the company’s net asset value – the underlying worth of the company’s investments.
Shareholders will have to decide whether to back Laxey’s demand for a so-called Discount Control Mechanism, which would force Alliance Trust to buy back its own shares if the price falls below 90 per cent of net asset value.
Kingsnorth, who controls 1.8 per cent of Alliance Trust, said his proposal would remove the ‘lottery effect’ of investing in the 123-year investment firm.
Laxey also hit out at the longterm bonus scheme for Alliance Trust executives, which he claimed could pay out handsome rewards even if the performance was substandard.
Alliance Trust boss Katherine Garrett-Cox, who is understood to be reluctant to be drawn into a slanging match with Laxey, declined to comment.
The Alliance camp argues that claims by Laxey that Garrett-Cox enjoyed a pay package of £6.1m last year are overstated as the figure assumes all her long term incentive programmes pay out in full.
Her supporters say £2.2m of awards that have already lapsed were included in their calculation and that the total paid to her was £2.45m.
Alliance’s discount has averaged 17.4 per cent over the past 12 months.
It has narrowed to around 15 per cent but is still wider than the average among its peer group of 8.5 per cent. Shares fell 3p to 378.65p.
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