F&C mount their defence as rebels prepare for board assault

F&C, which employs about 130 in Scotland, urged shareholders in a circular to vote against what it called "cuckoo-like" proposals to replace chairman Nick Mac-Andrew with Edward Bramson, founder of investment vehicle Sherborne.

The group said Sherborne, which has built up a 17.5 per cent stake in the company, had not put forward an alternative strategy. "Our strategy is working, the results are coming through and this unwelcome and opportunistic move by Sherborne is damaging to the business and it not in the best interests of shareholders," MacAndrew said.

He told The Scotsman later: "The bottom line is that uncertainty on strategy in any business is always a negative. 'Trust us' is Sherborne's only mantra. They are asking all our stakeholders to give them the benefit of the doubt."

Sherborne declined to comment. It has previously drawn attention to F&C's shares' underperformance against its peers in recent years.

Aviva, F&C's third-biggest shareholder with 6.4 per cent, is backing Bramson and has pointed to his track record of delivering shareholder value at other companies, including Elementis, the speciality chemicals group, and Spirent electronic control systems.

But MacAndrew said: "You major on your successes. But they (Sherborne] are newcomers to this industry. What are they bringing to the table? Would you give your money to be managed to people who have no knowledge of the sector?"

F&C, owned by Friends Provident until the summer of 2009, manages more than 100 billion for more than three million clients. Its operations in Scotland include private equity, some investment trusts and part of the finance department.

Sherborne demanded the EGM consider the appointment of Bramson, and allies Ian Brindle and Derham O'Neill. It has also proposed the removal of non-executive director Brian Larcombe.

However, F&C chief executive Alain Grisay said yesterday he believed the "overwhelming majority" of the group's shareholder staff will vote against the rebel proposals. Hinting at possible departures, Grisay said he feared the reaction of key staff if the proposals succeed.

F&C confirmed it will update investors on 31 January on assets under management, fund flows and efforts to simplify its business model.

Yesterday's circular said the group's investment performance had "been transformed over the last three years, with over 70 per cent of assets under management currently performing above their benchmark".

It also repeated that , after four years of net outflows, net inflows were reported in the first nine months of 2010.