War of words escalates between Alliance and Elliott

Katherine Garrett-Cox heads under-fire Alliance Trust

The increasingly acrimonious row between Alliance Trust and Elliott Advisors has taken a fresh twist after the US hedge fund criticised “unsubstantiated attacks” on the directors it wants installed on the wealth manager’s board.

Dundee-based Alliance said last week that the trio – former SG Warburg executive Anthony Brooke, ex-Legal & General Investment Management chief executive Peter Chambers and Rory Macnamara, a former ­senior corporate finance professional – “cannot be considered to be independent”.

The firm, headed by chief ­executive Katherine Garrett-Cox, claimed their addition to the board would allow Elliott, which has a 12 per cent stake, to “pursue its own agenda and engineer a quick exit from its shareholding”.

Elliott responded yesterday by saying Alliance had failed to engage on “matters of substance and resorts to personal attacks in a manner unbecoming of directors of a public company”.

It added: “By any standard of accepted governance principles, the nominated directors are truly and fully independent and, if elected, would not countenance being ­unduly influenced by any particular shareholder in any way.”

Its statement comes after former Alliance non-executive Tim Ingram said he would be voting in favour of Elliott’s bid to shake up the boardroom at the Tayside institution’s annual meeting on 29 April. Ingram, who served as a director from 2010 to 2012, chairs the Wealth Management Association and in an open letter to shareholders said: “The overall performance of Alliance Trust in the medium term has been dismal.”

Analysts at JP Morgan Cazenove – Alliance’s corporate broker – said the interventions from Ingram and Elliott had landed a “few heavy blows” on Alliance, which the hedge fund said has underperformed its peers “over all relevant return periods”.

In a note to clients, the broker added: “It is difficult to see shareholders tolerating underperformance from this strategy over the next few years and, were that to be the case, pressure would clearly grow to outsource some or all of the investment management functions.”