Last week was a pretty typical one for corporate activity: an investment bank was subject to a call for break-up; an investment trust escaped an attempt to unseat its board; a media company ditchedits chairman and chief executive. And central to all this activity were hedge funds.
TCI is the fund calling for the break-up of ABN Amro; Carrousel Capital wanted Gartmore European to appoint a new board; Hanover persuaded Scottish media firm SMG to do just that.
Hedge fund activity has been a growing factor in bids and deals over the last five years. But, says Richard Grainger, corporate finance chairman at Close Brothers, ‘the really interesting thing about hedge funds is how they have changed’. Once, they were little more than arbitrageurs, piling into a company in the hope of making 5p a share in a couple of days. Now, a growing number are far more activist: they buy stakes in companies with a clear view of what the share price should be – and, often, an equally clear view of how to achieve it.
