Garrett-Cox says changes have paid off as Alliance Trust seals £1m deal
THE Alliance Trust has acquired Aviva Investors’ £1.2 billion “Sustainable and Responsible Investment” (SRI) business in a £1 million deal, which the firm said will transform its loss-making investment fund division.
The transfer of the fund to Alliance Trust Investments (ATI) will boost its assets under management from £150m.
It was announced as the £2.1bn firm hailed an improvement in its investment performance, which for the last two quarters has maintained above-average performance compared with its peers – the first time in a decade it has done so.
Chief executive Katherine Garrett-Cox said the performance showed that the changes she has made to the business since becoming chief executive four years ago are bearing fruit.
She said: “This has been a substantial work in progress. We had to stop doing a lot of things, we had to change a lot of things, we had to put all of the infrastructure in place, we had to hire a huge number of people and do it at the same time the financial markets faced the biggest crisis they have had in living memory.
“We hear what people have said. For many years they have said, ‘Show me the figures’. Today we have shown the figures. The numbers don’t lie and the numbers are good.”
In the last six months to the end of June, the trust outperformed the “global growth” sector, moving to the second quartile in terms of net asset value and share price. It said total return of the investment company’s net asset value was 5.5 per cent per share, with the fund ranked 13 out of 33 in its peer group over the last six months.
The Dundee-based company also confirmed it would further reduce its investments from 200 to 100 in a dramatic restructure of its equity portfolio first unveiled in June. The trust said the move would make cost savings of £2m, with a one-off £1m restructuring cost.
Garrett-Cox also confirmed eight fund managers will leave as of this month. As a result, the firm will have half of its equity investment managers – about seven – in Dundee, and the other half based at its London office.
She said: “In the past we have been criticised because people say you can’t get good people to work in Dundee, which is unbelievably rude and disparaging. It is a great city to work in.
“But the truth is … if you want the best people, you need to be flexible enough about where you base them.”
She added that the focus of the slimmed-down portfolio would be “unconstrained” and not reliant on indices, which would allow the firm to continue the shift in its investment focus from UK-domiciled stocks to those with US exposure.
Yesterday’s update also addressed the discount between the value of the trust’s shares and assets (NAV), which fuelled a activist shake-up – led by Laxey Partners – which came to a head at its AGM in April.
The company said in the first half of the year it spent £106.8m buying back and cancelling its shares. The discount narrowed at the end of April to 14 per cent, but by the middle of June it widened to 16.7 per cent, despite it having acquired further 3 per cent of its shares since April. But the firm argued this “reflects the experience of the sector”.
Garrett-Cox said: “As far as we can tell Laxey has sold [its 1.7 per cent stake] and are no longer on our share register.”
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Thursday 20 June 2013
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