Scot Mortgage director: ‘I was removed by board’

Amar Bhidé

A director of Scottish Mortgage Investment Trust, Baillie Gifford’s flagship fund, has told Scottish Financial Review he was “removed” from the board of the £13.4 billion fund “by the vote of the board.”

Asked to confirm a report he had left Scottish Mortgage, non-executive director Amar Bhidé replied: “Yes. I didn’t leave. I was removed by the vote of the board.”

It is understood Bhidé clashed with Scottish Mortgage chair Fiona McBain over the process to appoint two new board members — and over his assessment of the risks posed by the trust’s investments in unquoted companies.

However, Scottish Mortgage Investment Trust released a stock exchange statement late on Friday saying Bhidé “remains a director of the company and has not resigned or been removed.”

Scottish Mortgage said: “Contrary to recent press speculation, the board can confirm that, at present, Professor A Bhidé remains a director of the company and has not resigned or been removed.”

McBain said:”As chair of Scottish Mortgage, 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.

“The board is convinced that the managers are taking the right long-term investment approach and building a portfolio of exceptional growth companies that can deliver for shareholders over five years or more.”

The formerly high-flying Scottish Mortgage fund saw its share price almost triple during 2020 and 2021 from around £5.80 to over £15, but the stock was routed amid the global sell off in the fund’s beloved “growth” and technology stocks and it currently trades around £6.80.

Over the longer term, Scottish Mortgage has an impressive investment record. In its half-year report in November, Scottish Mortgage said that over 10 years, its net asset value increased by 528% versus a 208% increase in the FTSE All-World index. Over five years, it increased by 115% against 53%.

Bhidé is a writer and academic and was appointed to the Scottish Mortgage board in 2020.

Bhidé worked as a consultant with McKinsey & Co before taking up professorships in business at Harvard, Chicago, and Columbia universities.

He is currently the Schmidheiny Professor at the Fletcher School of Law and Diplomacy, Tufts University.

A report in London’s Financial Times newspaper said Bhidé left the FTSE 100 company’s board following what he said was a “disagreement over the appointment of new board members” at Scottish Mortgage.

Bhidé told the Financial Times that he had clashed with Scottish Mortgage chair Fiona 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.

The newspaper quoted Bhidé as saying: “I’ve 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 …

“In my opinion they do not have the capabilities and governance clout to be able to monitor the illiquid investments on which there is little audited information in the public sphere.

“The fact that you’ve pulled it off for the last 10 years has been due to an utterly aberrant period in financial history. Don’t delude yourself that you can keep playing this game.”