Henderson Global Investors will launch an activist investment fund later this year, the fund manager said in a statement. The fund will be a minimum of £100m in size, with a cap of £500m and an investment time horizon (and lock-in) of up to three years.
The Henderson Active Engagement Fund will invest in the shares of listed companies that have “sustainable businesses but whose stock-market valuation is adversely affected by strategic, structural or governance issues.” It will look to hold significant minority stakes in 10-15, pan-European listed companies in the £100m to £1bn market-capitalisation range.
Helpfully, Henderson’s head of equities, Andrew Formica is ready to provide an example of the type of investment the fund would have looked at, had it been around at the time (and had a much larger budget): “Morrisons is a great example of a company where management support – of the type we could provide – would have helped,” he told Alphaville. “They had a really strong proposition in terms of the merger with Safeway, but the execution let them down.”
In terms of potential targets, Mr Formica and his team are looking anywhere, “but retailing, media, leisure, telecoms are areas that stand out in terms of unlocked value.”
Henderson will supplement its investment committee – Stephen Peak and John Havranek as well as Mr Formica – with expertise from PwC, which will provide the fund with access to business-recovery professionals and independent turnaround directors.
Activist investing has a long history in the US, where its early practitioners were decried as greedy corporate raiders, but the phenomenon has not taken off in the same way in Europe. “Activism has been [in Europe] for a few years, but it’s not as high profile as in the US,” the Henderson man said. “And a lot of the activist investors still come from the US. We expect that to change quite a lot.”
Mr Formica believes the increasing financial sophistication of investors – who have embraced the world of REITs, private equity and hedge funds – will lead to more clients embracing activism. The fact that recent research shows activist investment managers delivering substantially higher returns to shareholders might also help.