The backing of the First Minister and the Scottish National Party for Alliance Trust in its battle with New York hedge fund Elliott Advisors has been called "nonsense" by a leading shareholder group.

 

ShareSoc, which says it represents the interests of the small investors who own 30per cent of the stock market, said a shareholder vote on new company directors should not be turned into a political issue.

Roger Lawson, director of ShareSoc said: "It is not for politicians to comment on these things, they should leave it to investors and shareholders."

The latest twist in the war of words ahead of next week's annual meeting in Dundee of the 127-year-old trust came as sources suggested the vote could be a close-run thing.

Nicola Sturgeon has signalled her interest in Alliance Trust's campaign to see off rebel shareholder Elliott, following an approach by chief executive Katherine Garrett-Cox. The Dundee-based company says the First Minister has highlighted her concerns about the long-term sustainability of the company and challenges which might be motivated by short-term market gain, and invited Ms Garrett-Cox to remain in contact.

The SNP's deputy leader Stewart Hosie MP has come out openly in support of the trust, saying it is a "critical time for its future" and that Dundee's future and Alliance's role in it, with its 250 jobs in the city, must be "protected".

Mr Hosie said while he recognised the importance of active and healthy investor challenge, he did "do not believe that Elliott Advisors' goals are aligned to the long term interests of the city of Dundee or Scotland more broadly", and he was therefore encouraging Alliance Trust's 65,000 shareholders "to consider their votes very seriously ahead of next week's AGM" .

Mr Lawson commented: "What is being proposed is the appointment of three new directors, there is no proposal to change the basis of the company whatsoever or to demolish it. They are really talking out of turn, it is just nonsense."

It emerged yesterday that he Elliott camp is hopeful that it might be able to command the necessary support of a majority of shareholder votes for its proposals.

Sources say pronouncements by institutional shareholders, alongside the record of a similar vote four years ago, suggest the Alliance board may have a fight on its hands.

In 2011 a proposal by Laxey Partners, an Isle of Man-based hedge fund then holding just 1.7 per cent of the trust, commanded support from 33 per cent of the shareholder votes. "Laxey got 21per cent in favour and 1.7per cent was their holding, Elliott have 12per cent, so that get's you to 31.3per cent," a source said. "Brewin Dolphin have been critical and they hold 4.4per cent,Tilney Bestinvest have backed Elliott  land hold 1.1per cent."

The source added: "Bear in mind that DC Thomson (supporter of Alliance) held 8per cent at the time of Laxey and how hold 5per cent and many of the remaining institutions usually agree with the advice of the proxy advisors (generally supporting Elliott) and Hargreaves Lansdown have also called performance 'pedestrian' but we don't know how many of their clients they are instructed to vote on behalf of."