Activist shareholder Nelson Peltz grapples with insurgent investors

A London-listed fund linked to Nelson Peltz’s Trian Fund Management is coming under pressure from a group of insurgent investors seeking to shake up its board “to improve governance and restore trust”.

Peltz, known for campaigning against the management of companies such as consumer goods group Unilever and asset manager Janus Henderson, has found himself the target of investors demanding changes at his Trian Investors 1 fund.

A committee of investors – made up of asset managers Global Value Fund, Invesco, Janus Henderson Investors UK Limited and hedge fund Pelham Capital – has given notice of an extraordinary general meeting of its shareholders.

He calls for the removal of board members Chris Sherwell, Simon Holden and Anita Rival, and the appointment of two new directors: Robert Legget, who would be independent, and Miles Staude, portfolio manager of the Global Value Fund and representative of the committee. . .

The committee, along with Aegon Asset Management which said it would back the proposals, controls 43.6% of the fund’s voting equity.

The Janus Henderson fund’s participation in the activist group puts the US asset manager in a tricky position as Peltz has pushed for sweeping changes at the firm and won a seat on its board in February.

The investor criticism centers on changes made to the company’s investment management arrangement with Trian at its annual general meeting last June.

When Trian Investors 1 listed in September 2018, it decided to invest in a single publicly traded target, work to improve the business, and then exit the investment and return the capital to shareholders. This model is similar to that used by Edward Bramson’s activist vehicle, Sherborne Investors.

However, last year, ahead of its AGM, the board of Trian Fund 1 proposed a series of investment policy changes that the committee believed would benefit the manager financially. Basically, these changes would allow him to hold multiple investments simultaneously, and instead of returning all capital and profits to shareholders after an investment exits, the manager could reinvest them.

The committee believes that the board should have surveyed independent shareholders to see if the changes to the investment policy were supported. The change in investment policy was approved by 52% against 48% last June. Trian and the company’s financial adviser, Jefferies, together owned 28.6% of the company at the time of the AGM, and they voted in favor of the changes.

The Investor Committee was also concerned about the appropriateness of its fee structure. Since the IPO, he calculates, the combined returns to shareholders have been £57.6m and the manager has received £56.8m in performance and management fees. But a person close to the company said that since the IPO it had received £12m in total fees, mostly management fees. He would not receive any performance fees until the investments were made at a profit, the person added. From the IPO to the end of May, its net asset value increased by 64%.

The committee also believes that Jefferies may have had a conflict of interest at the time of the vote. He was a 13.5% shareholder in the company at the time of the AGM and the committee believes that he has an advisory relationship with Trian and the company.

Trian Investors 1 said it was “reviewing the content and legality” of the general meeting request. The company’s board said “it has always acted responsibly. . . and has effectively discharged its fiduciary duties”. Jefferies declined to comment.

The move of Trian’s listed vehicle follows a 10-month public battle between a group of British shareholders and New York-based billionaire activist Dan Loeb over policies aimed at controlling the handover of the investment trust listed in London which serves as a feeder fund for Loeb’s main Third Point hedge fund.

Insurgent investors, led by UK fund manager Asset Value Investors, reached a truce in February when Third Point agreed to appoint an independent director nominated by disgruntled shareholders. Staude of the Global Value Fund was also part of the group of activists facing Loeb.

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