Laxey challenges Alliance Trust to release capital

Activist investor Laxey Partners has called on Alliance Trust to increase dividend payments from realised capital gains, in a bid to narrow the investment trust’s discount.

In a letter to Alliance Trust, Michael Haxby, director of Laxey, says new rules to be implemented in April would increase the yield to a point where shares in the trust trade at net asset value or a premium.

He writes: “This could help all investment trusts but especially trusts like Alliance which have consistently traded at wider discounts than their peer group.”

Haxby says the process would complement current share buyback measures aimed at reducing the discount.

He says the current buy-back policy is “poorly designed”.

“We call on our new chairman, Karin Forseke, to grasp the opportunitiy to announce a review of Alliance’s distribution policy in conjunction with a review of management provisions,” he adds.