A BATTLE has broken out between a division of Scottish Widows and the board of the Balanced UK Property Trust, an investment trust previously managed by Scottish Widows Investment Partnership (SWIP).
Scottish Widows Unit Funds (SWUF), which is the unit- linked funds business of Widows, is unhappy that the management of the trust has been taken away from SWIP in favour of Edinburgh-based Cordatus, set up this year by three former property managers
of SWIP - head Tom Laidlaw, his former SWIP deputy Mike Channing, and Michael Cunningham.
A spokesman for SWUF was adamant there was no dialogue between the board and shareholders and that the change in contract was presented as a fait accompli. He added that the board did not come forward with any proposals for any shareholders that were dissatisfied with the changes.
Another problem, he said, was that a new, small company was not right for their investors.
A statement from SWUF said that, to make the most of investment in property, it was important to have strength and depth in resources to maximise the number of investment opportunities available to the investment manager and to exploit the value of invest-ments through active management.
"They would rather have SWIP, which is a larger, established company with a large team," the spokesman said.
SWUF insists that one of the problems was that Cordatus's resources lacked the depth for managing a trust valued at more than £400m. SWUF, which holds a 10.5 per cent stake in the trust, said it now wanted to set up an extraordinary general meeting to replace the existing board and to set up a new closed-ended investment company for the existing shareholders to be managed by SWIP.
But a spokesman for the trust's existing three-man Channel Islands-based board said SWIP was given every chance to put its case to hold onto the management of the trust.
"SWIP was invited to a beauty parade; it participated and the board decided it was not good enough," he said.
The trust's board said in a statement that it had attempted, without success, to engage the company since February about the future direction of the trust, but only received the proposals yesterday.
"The board has being trying to engage with SWIP in relation to shareholding ever since the announcement to change the manager and it has not had any success in getting any response.
"Whatever it does, it will be to look at the best interests of all shareholders."
