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RWC: our plans to boost activist investing in the UK
by Annabelle Williams on Nov 16, 2012 at 12:00
RWC is looking to raise the profile of activist investing in the UK, following its acquisition of an eight-strong team of fund managers from Hermes.
The equity fund house recently took on three teams of activist investors, whose strategy is to buy sizeable stakes in undervalued companies and try to change the business from the inside.
RWC chief executive Peter Harrison said the concept ‘doesn’t really exist over here’, but activist investing is a more common strategy in the US and parts of Europe and he believes investors will be glad of an approach that puts ethics and shareholder value first.
‘The thing that really appealed about [the Hermes deal] is that markets are absolutely cratering at the moment and share prices are not forming in a particularly ordered manner,’
‘If you own something which is out of favour the share price can either not move or be completely wrong for a very long period. So this team find really undervalued businesses and then they do something about it. This differentiates them from most managers who find undervalued businesses and don’t do anything about it.’
RWC principal Dan Mannix added: ‘There are a few big fund managers, where you’ll occasionally see Neil Woodford buy BAE and take a view but there’s a difference between that, and having the genesis of every investment being one that you’ll create alpha from.’
The teams, who moved over in September, came over along with their three funds, Europe, UK and Japan, which take a long-term strategy whereby investors have to lock up their capital for two years. RWC hopes this long-term focus will be something of an antidote to what it perceives as an attitude of short-termism, which has gripped markets in recent years.
‘Market timing is a very difficult thing to do,’ Mannix said. ‘People have lost confidence in active managers just at the point when they should be gaining confidence that active managers can generate returns as markets stop getting whipsawed by political interference,’ he added.
The Hermes deal was in the pipeline for six months, a shorter timeline than many of RWC’s other takeovers, Harrison said, as the Hermes team were keen to move on and find some new momentum.
‘The team needed a new start, they needed their message to be taken out there, they needed some new fund structures and they needed some new energy,’ Harrison said.
RWC has already moved to launch a $1 billion capacity Cayman master feeder fund for the European Focus team, headed by Maarten Wildschut and Petteri Soininen, who currently manage $300 million in assets. Their existing European Focus fund has generated returns of 115% since 2009, compared to a 51% rise in the FTSE World Series Europe index.
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