The Alliance Trust is losing its leading lady.
Sidelined former chief executive Katherine Garrett-Cox is off to pastures new (we know not where at this moment) as the most far-reaching restructure in the company’s history continues apace.
Her coat has been on a shoogly peg for months after she and chairman Karin Forseke last year oversaw a public fight with Elliott Advisors, the Trust’s single largest shareholder.
In a few short weeks, the defence of the realm cost an eye-watering £3 million.
But the problem for the management was they were trying to defend the indefensible.
The discount to net asset value a key metric for tracking the Trust’s performance was too big, as many investors argued over many years.
The fact the Trust has spent tens of millions of pounds since October on buying back and cancelling its shares to drive the discount down into single figures tells you all you need to know on that front.
There were other issues too, not least the seven-figure size of the CEO’s pay packet in more constrained times, and the fact that some shareholders felt their voices weren’t being heard.
But the real millstone around Ms Garrett-Cox’s neck was the Trust’s subsidiary business the savings (ATS) and investment (ATI) arms.
ATI a specialist fund manager was particularly problematic for the CEO.
It was formed on her watch and grew under her personal supervision to manage funds in excess of £5 billion, but it lost money.
There were pleas for patience to shareholders to allow the business to grow and mature.
But it was obvious at successive AGMs that I attended that at least a section of the shareholder base was sceptical about the value of the operation to the Trust as a whole.
Opinion was split about whether it was the golden goose about to lay, or an expensive distraction from the Trust’s core business of delivering a return for its investors.
However, until hedge fund dragon Elliott came along and built up a huge stake and started breathing its particular brand of activist fire, Ms Garrett-Cox and her chairmen were able to ride out the bumps in the road.
The Trust’s main portfolio of holdings was radically reshaped to focus on fewer, high-quality stocks, and a multi-million-pound move to a new purpose-built headquarters on Marketgait was negotiated without great incident.
It appeared that as long as the Trust maintained its justly proud record of increasing the annual dividend it has now grown for 48 consecutive years and there was a good spread provided for shareholders attending the AGM, all would continue to be well.
But Elliott a company with enormous financial clout that is used to getting its own way did not view the Trust through the rose-tinted spectacles that many others did.
They had a clear vision of how to make their money work for them and felt no compunction in rocking the boat. That determination was the beginning of the end for Ms Garrett-Cox and for many of the senior team around her.
It has now been agreed that she will exit stage left next month, pursued by a seven-figure sum of compensation cash. Very best wishes to her.
However, my focus is not the outgoing CEO but those who are left behind and what the future holds for them and one of the UK’s great financial institutions.
The pace of change at the Trust in recent months has been frenetic, and I am concerned not only about what will emerge operationally from the wash but, ultimately, whether Dundee will remain central to the Trust’s plans.
In a note issued following Ms Garrett-Cox’s departure on Monday, analysts from Numis said while Alliance was now a “far more attractive vehicle for investors”, it was “still not out of the woods yet” in terms of scrutiny of its performance.
“In our view, a tender is a possibility,” it stated.
“Furthermore, changes in the Trust’s structure and governance mean that there is a realistic possibility that third-party managers could be appointed in future.”
Those are worrying words.
Rather than coming to an end with Ms Garrett-Cox’s departure, it may just be that the revolution at Alliance Trust is just beginning.