Pittsburgh Post-Gazette – Until recently, most investment banks had little to do with activist hedge funds. Many of these investors were too small to have a chance of succeeding in their quests toshake up companies, and banks were wary of antagonizing their corporate clients by helping the rabble rousers.
That is changing. On the heels of Lazard Ltd.’s work advising Carl Icahn in his effort to pressure Time Warner Inc., a number of investment banks are offering advice and financing to back various activists, according to people close to the situation.
UBS AG, for example, has a team that courts hedge funds and has represented three activist funds in the past year on separate deals. Blackstone Group has lent a hand in the successful effort of another activist hedge fund, and others say they have begun to work with activists taking on various underperforming companies, sometimes offering behind-the-scenes guidance.
Some banks say they are more willing to work with activists because these funds increasingly have deep enough pockets to succeed in their challenges, and because the funds sometimes make good suggestions that can reward shareholders. As hedge funds expand, many are starting to resemble other financial institutions, pushing investment banks to treat them as such, these bankers say.
