* Wants discount control, changes to savings scheme voting
* Owns 1.5 pct, put forward plans by forming subsidiaries
* Says can count on support of majority of institutions
* Activism now focused on restructuring rather than M&A
(Adds Laxey comment, detail)
By Laurence Fletcher and Sudip Kar-Gupta
LONDON, Feb 7 Activist hedge fund Laxey Partners
demanded changes at 123-year-old investment company Alliance
Trust (ATST.L) to boost its shares, the latest example of rebel
shareholders putting pressure on a fund management company.
Laxey, which has a 1.5 percent stake but which has set up
subidiary companies to let it punch above its weight, said in
letters to the trust and to shareholders that Alliance should
set up a mechanism to limit the discount of its shares to net
asset value (NAV), currently 16 percent.
A number of investment trusts have a floor below which they
will buy back shares in order to try to narrow the discount,
allowing shareholders wanting to sell to exit closer to NAV.
"They stand out a mile as having a big discount," Colin
Kingsnorth, partner at Laxey Partners, told Reuters. "It's
resisted change and the world's moved on a bit."
Isle of Man-based Laxey's move comes a week after activist
investor Edward Bramson ousted the chairman of F&C Asset
Management FCAM.L and pledged a shake-up of the British funds
Laxey also wants Alliance to change the voting process in
its savings scheme, which it says means some shareholders' votes
are used by others if they haven't given specific instructions
on how their votes are cast.
Kingsnorth told Reuters Laxey can count on "the majority of
institutional support ... approximately half the (shareholder)
register" and said Laxey plans to increase its Alliance stake.
While admitting Laxey does not have "a dominating
percentage", he said the fund had been able to put forward its
resolutions at the forthcoming annual general meeting by forming
100 different subsidiary companies -- fulfilling a criteria that
new proposals are backed by at least 100 groups.
Despite a recent uptick in shareholders flexing their
muscles, Kingsnorth said activism had changed since its
pre-crisis heyday, when The Children's Investment Fund (TCI)
famously launched an attack on ABN AMRO in 2007 that helped
trigger the Dutch bank's sale.
"What's working (now) is restructuring activism. (Bramson)
is not putting F&C up for sale, he's trying to make it work.
"If five years ago you'd tend to see hedge fund rush in (to
activist situations), that's not happening today. What tends to
happen is that you go round more traditional institutions to see
if the proposal makes sense to them."
At 1155 GMT Alliance Trust's shares were up 0.2 percent at
367.4 pence while the FTSE 100 .FTSE was up 0.8 percent.
(Editing by David Holmes)