After spearheading the transformation of Alliance Trust (ATST), Lord Smith of Kelvin has announced he is standing down as chairman of the 130-year old investment company.
Smith took over from Karin Forseke in January 2016 just as US activist investor Elliott Advisers was demanding a change of governance after years of tension with the £2.6 billion fund.
He was charged with steering the trust through a dramatic simplification and by 2017 it was well underway.
Over a four-year period that saw Smith move the trust back to its pure equity-only roots, it sold the in-house sustainable fund management arm Alliance Trust Investments to Liontrust for £30 million and employed Willis Towers Watson to manage the portfolio in a bid to turnaround performance.
Willis shifted the Dundee-based investment trust into a multi-manager strategy like rival Witan (WTAN), picking a panel of eight external fund managers to invest in their ‘best ideas’. Earlier this year the global fund hired sustainable fund manager Hermes to help ramp up its engagement with companies on environmental, social, and governance issues.
Smith also oversaw the sale of the trust’s investment platform, Alliance Trust Savings, to Interactive Investor for £40 million, and offloaded mineral rights and private equity investments in a bid to further streamline its asset portfolio.
The plans for a radical shake-up was enough to placate Elliott Advisers, which agreed to sell its 19.75% stake in the trust at the beginning of 2017.
The trust bought back Elliott’s 95.5 million shares at a discount of 4.75%, costing around £620 million, ending seven years of tension and two years of open warfare that cost Alliance Trust chief executive Katherine Garrett-Cox her job.
Smith’s finishing touch happened earlier this year when he slashed boardroom pay that saw his own pay cut from £120,000 to £80,000 in July alongside fee reductions for other directors on the six-strong board.
With the overhaul completed, former BBC boss Smith - who was last month appointed chairman of Scotland’s main economy development agency, Scottish Enterprise - now passes the baton to deputy chairman Gregor Stewart and a new non-executive director will be appointed to the board.
Smith said he was ‘privileged’ to have held the role and thanked shareholders for their support over his three-and-a-half year tenure.
‘As we have now completed the simplification of the trust, I am pleased to be able to hand over to Gregor,’ he said.
‘Like all on the board, he played a leading role in the changes implemented during the past three-and-a-half eventful years. These changes have put the trust in a strong position to deliver attractive returns to shareholders for generations to come.’
Stewart is also non-executive director at Direct Line Group, FNZ, and chairman of Intrinsic. He spent 24 years at a partner at Ernst & Young.
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