Equity portfolio to be trust’s ‘singular focus’ after ATS sale

The divestment of ATS clears the decks for Alliance Trust to concentrate on its core equity portfolio.

Deputy chairman Gregor Stewart told The Courier the proposed sale will create a financial platform of real scale in the UK with an opportunity to grow.

“As previously reported Alliance Trust has been getting quite a lot of interest in ATS and we were of a view as a board that we need to investigate the interest a bit more,” Mr Stewart said.

“We have been working at this for quite a number of months and using external advisers to help.

“Around 30% of Alliance Trust shareholders manage their investment portfolios through the ATS platform.

“We were considering ‘is there a better home for this company and a better home for our customers’ and the conclusion was yes.”

He said a sale would also allow the trust to give its full attention to delivering long-term investor returns from its main equity holdings.

“Now we can say to investors our singular focus is on the equity portfolio,” Mr Stewart said.

He added he could make an “absolute commitment” the trust would continue to operate from Dundee post-sale.

Since the spring of 2017, the main portfolio has been overseen by a group of eight wealth managers hand-picked by Willis Towers Watson.

The strategy to outsource is proving successful, with returns to date tracking ahead of the MSCI All-word index which it is benchmarked against. The apron strings tying Alliance Trust Savings to its parent are being cut.

In itself, that is no surprise. The trust offloaded its investments arm ATI two years ago in a £30 million deal and the future of its savings subsidiary ATS has been much talked about ever since.

But the origins of this latest deal goes back further – to the damaging battle between the trust and its then-largest shareholder Elliott Advisors that culminated in a post-2015 annual general meeting boardroom bloodbath.

It was that battle which brought renewed shareholder focus to the fact ATI and ATS were contributing little – if anything at all – to the trust from a financial perspective.

Some investors argued there was worth in operating the subsidiary businesses but many others viewed the subsidiaries as expensive distractions from the trust’s real purpose of delivering shareholder value from its core equity portfolio.

The ii deal unencumbers Alliance Trust and is an opportunity for the trust to prove it remains a relevant player in UK financial services.

As for ii, the fact it is swallowing ATS whole – Dundee HQ and all – can only be read as a good sign of its intent to commit to a long-term relationship with the city and the talented ATS workforce.