Scottish Mortgage chair quits after governance row

The chair of one of the UK’s biggest tech investors is standing down after a corporate governance row.

Fiona McBain, who has chaired Scottish Mortgage Investment Trust since 2017 and sat on its board for 14 years, will leave after the trust’s annual meeting in June.

The FTSE 100-listed trust, the flagship fund of tech-focused investment company Baillie Gifford, also said Prof Amar Bhidé had left the board, after Bhidé questioned McBain’s independence and flagged concerns over governance issues and the trust’s exposure to illiquid investments.

Scottish Mortgage, one of the UK’s oldest investment trusts, also lost its co-manager James Anderson last summer. The star technology investor claimed the fund management industry was “irretrievably broken” when he quit, blaming a focus on short-term returns and “seeking minor opportunities in banal companies”.

Anderson generated huge returns for investors by giving early backing to technology companies such as Tesla, Amazon and China’s Tencent and Alibaba. More recent investments include the Swedish battery maker Northvolt and the Covid-19 vaccine maker Moderna. However, the trust’s shares have plunged amid the tech rout, falling 34% over the past year.

Bhidé, a business professor at Tufts University in Massachusetts, who had been a director of Scottish Mortgage since 2020, told the Financial Times last week that he had clashed with McBain over the process to appoint two new board members and his assessment of the risks posed by the trust’s investments in unquoted companies, valued at £3.8bn at the end of January.

McBain will be succeeded by Justin Dowley, the company’s senior independent director, who also chairs Melrose Industries and is a deputy chair of the Takeover Panel.

Speaking to the Financial Times, Bhidé said: “I have been very concerned about the share price performance and the discount, and trying to get people to understand that there is a structural reason for this.” He also expressed concern that “no one on the board has any professional investment experience”.

On Friday, Scottish Mortgage issued a statement in response to the report, saying Bhidé had not resigned or been removed from the board. The UK corporate governance code recommends a nine-year limit for board chairs from the date of becoming a non-executive director.

In the trust’s statement, McBain said: “I have complete confidence that Scottish Mortgage’s board provides robust governance and oversight. Current topics such as short-term volatility and the company’s exposure to private companies have been debated at length and will continue to be scrutinised by the board.”

In other changes, Prof Patrick Maxwell will replace Dowley as senior independent director while Prof Paola Subacchi will leave the board at the annual meeting.

The trust, which was founded in 1909, said on Tuesday it had been conducting a recruitment process over the past few months with an external firm, “with a view to further board refreshment”. It said the process was “well advanced”.