Hedge fund aggressor should be resisted by Third Point shareholders, claims ALEX BRUMMER
The proposed takeover of British-listed fund Third Point Investors Limited (TPIL) by US-based Third Point's Dan Loeb has sparked concerns over shareholder rights. Loeb aims to pivot TPIL into a life and annuity reinsurance company through the acquisition of Malibu Life Reinsurance.
Critics argue that the drastic change in TPIL's strategy, from an investment trust to a reinsurance business, should provide minority shareholders with a full exit at asset value. However, the partial exit offer was seen as insufficient, with shares trading around 25% below net asset value even after improvements to the proposed exit terms.
Governance and voting influence have also raised concerns. With Dan Loeb holding a 25% voting stake under revised UK rules, critics worry that he could effectively steamroll minority dissent in closely contested votes, undermining shareholder democracy.
Institutional Shareholder Services (ISS) and PIRC have recommended shareholders to reject the reinsurance deal, citing concerns over strategic direction and shareholder protections. Although Glass Lewis supported the acquisition, they expressed reservations about the proposed incentive arrangements.
The controversy has led to a significant backlash, with about one-third of votes cast opposing the deal. Critics condemned the board and the use of "VoteCo" mechanisms to push the vote through despite minority shareholder opposition.
The potential impact on shareholder rights includes setting a precedent for controlling shareholders fundamentally changing a fund’s mandate without providing adequate exit provisions, raising concerns about protecting minority investors in UK-listed investment trusts. The controversy highlights tensions between activist investors driving strategic shifts and minority investors' rights in listed vehicles.
In a separate development, Apollo, the buyer of Pension Insurance Corporation (PIC), is an offshoot of US hedge fund Apollo. Apollo holds a 25 percent 'strategic' stake in Athora and chooses five members of the board. The Bank of England has warned of 'key vulnerabilities' associated with 'high leverage' in private markets, especially for insurers and reinsurers.
Meanwhile, the Faberge jewellery collection, known for its St Petersburg connection, has been purchased by tech entrepreneur Sergei Mosunov for £37million from miner Gemfields. The collection is designed in Britain and made where craftsmanship is alive, in Switzerland and Italy.
[1] The Guardian, "Dan Loeb's Third Point Investors in row over £500m deal to move fund to Cayman Islands," 2022. [2] Citywire, "Third Point Investors: A closer look at the Malibu deal," 2022. [3] Financial Times, "Dan Loeb's Third Point Investors faces shareholder revolt over Cayman Islands move," 2022.
Read also:
- Intensified farm machinery emissions posing challenges to China's net-zero targets
- Nuclear plant revitalized: Artificial intelligence-led demand breathes life into the Great Lakes nuclear facility
- International finance institutions, EBRD, EIB, and SEB, offer €84.8 million in loans for solar energy projects within Latvia.
- Yearly financial loss due to natural disasters in Pakistan amounts to roughly 2% of the country's GDP, as per the United Nations.
