Alliance defeats Laxey's shares buyback proposal

Alliance Trust has seen off an attempt by rebel investor Laxey Partners to force the investment trust to buy back shares trading at a discount to net asset value of 10 per cent or more.

But the crucial vote to introduce a discount control mechanism, held at its annual meeting yesterday, saw just a narrow victory for the existing board, with 33.4 per cent of shareholders voting for Laxey's proposal.

Laxey claimed a partial victory, saying its move had forced Alliance to introduce a form of discount control mechanism. The private equity firm said: "We believe the board has only engaged with shareholders as a direct result of our successful actions."

Alliance said it had been acting to reduce the discount before Laxley's actions. Its outgoing chairman, Lesley Knox, added: "We will continue to focus on our key priority of improving the investment performance."

She confirmed that Alliance would continue to use shares buybacks.

Arguments raged about the discount between Alliance's share price and its net asset value after it soared to as much as 17 per cent, compared with an industry average 8 per cent. The trust's commitment to buybacks was welcomed by Christopher Brown of JPMorgan, who said: "Buybacks will enhance the net asset value and thus shareholder returns." He backed Katherine Garrett-Cox, the trust's CEO, to boost its performance.