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Woodford-backed Allied Minds replaces boss, scraps bonus scheme

10 June 2019

Jill Smith, the embattled boss of Allied Minds, resigns as the Neil Woodford and Invesco-backed technology investor bows to campaign by activist Crystal Amber to slash costs and improve shareholder returns.

Jill Smith, the embattled boss of Allied Minds (ALML), has resigned as the Neil Woodford and Invesco-backed technology investor bows to a campaign by activist Crystal Amber (CRS) to slash costs and improve shareholder returns.

Smith, a former non-executive director, became chief executive two years ago when her predecessor Chris Silva was ousted as shareholder dissatisfaction with the company’s performance grew.

With the shares down 90% since their peak in 2015 and following a decision in April to stop making new investments, Allied Minds said it had appointed its general counsel Michael Turner and chief financial officer Joseph Pignato as co-chief executives to focus on monetising its 10 existing portfolio companies.

The company has also scrapped a controversial long-term incentive plan which yielded Smith a $700,000 bonus last year. Richard Bernstein, the fund manager of 4% stakeholder Crystal Amber, had slammed the scheme for being too generous and not aligned with shareholders.

‘They run this company as if they are SoftBank but they couldn’t really run a bath,’ he told the Financial Times in April when upping his company’s campaign against Allied Minds with a proposal to take over its management and slash costs by 70%.

On Friday Woodford disclosed his stake in Allied Minds had fallen from 28.2% to 23.2% as a result of his firm losing a £3.5 billion mandate to run funds for St James’s Place. Excluding the Woodford Patient Capital Trust (WPCT), which invests in two of Allied Minds' investee companies, the manager has been stripped of all his external fund contracts in the past week since the suspension of his main Woodford Equity Income fund.

The former star manager is urgently restructuring the £3.7 billion portfolio, which has been weighed down by poor performance of key investments and holdings in illiquid unquoted stocks. The fund was forced to suspend dealing in its shares a week ago after a surge in withdrawal requests from worried investors. It is thought the manager will sell investments to build a large pool of cash that will enable it to reopen and meet the redemption orders.

The reduced holding leaves Woodford as the joint biggest shareholder alongside his former employer Invesco, which also holds 23.3%. The Invesco stake is largely held in funds Woodford used to run, now managed by his successor Mark Barnett.

Allied Minds shares gained 1.8p or 2.4% to 78p up from a low of 41p last November but down from their 725p peak over four years ago.

Both managers are also Crystal Amber’s biggest backers with Invesco owning 29.5% and Woodford over 17% of the AIM-listed company’s shares.

Peter Dolan, Allied Minds chairman, said: ‘As a result of steps taken under her leadership, we now have three technology companies on the cusp of commercialisation, all supported by leading strategic and financial partners.

‘Given the narrower scope of our strategy going forward and the company’s cost reduction targets, Jill has decided to return to serving as a director on multiple boards,’ he added.

Smith will remain a director on the board of Federated Wireless, a pioneer in mobile spectrum sharing technology that is one of Allied Minds’ key portfolio companies.

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