A group of hedge funds led by Equilibria Capital have joined forces in an attempt to oust the board of Belgian investment company RHJ International, which owns the Kleinwort Benson private bank in the UK, and replace the directors with nominees of their own, according to media reports.
The move could also lead to the spinoff of Kleinwort Benson and prevent RHJ from its planned takeover of German private banking group BHF Bank, according to a report by the Financial Times, which cited unidentified sources familiar with the matter. The company is scheduled to hold its annual shareholder meeting on June 18.
The hedge funds, led by activist fund Equilibria, sent a joint letter to the board of RHJ on Monday accusing the company’s management of ‘poor investments’ that have led to ‘clear value destruction’ at the firm, the FT reports. The hedge funds also called on the company to return some £250 mn ($377 mn) to shareholders from its cash holdings.
‘It is our belief that the company needs to change its strategic direction by moving swiftly to return capital to shareholders and [work towards] a full break-up under the stewardship of a different board,’ the letter states.
The funds said in the letter that Kleinwort Benson could be sold to the right buyer for £500 mn ($754 mn). They also complained about executive compensation at RHJ. Chief executive officer Leonhard Fischer received £4.1 mn ($6 mn) in compensation last year, one of the highest executive pay packages in Europe at one of the continent’s smallest financial services companies.
The group of hedge funds, which owns a combined 4 percent of RHJ stock, also includes Polar Capital of the UK, Mantra Investissement of France, Alpha Plus of Spain and Overseas Asset Management, which is based in the Cayman Islands, says the FT.
The reported move comes a year after hedge funds led by Equilibria, which represented a combined 3.4 percent of RHJ’s share capital, made a similar call for the company to spin off Kleinwort Benson and pay a one-time extraordinary dividend of €2.4 ($3) per share.
At the time, RHJ said in a news release that ‘due to the lack of distributable monies under Belgian company law, the company could not fulfill the shareholders group’s request that the proposed agenda item and resolution be added to the agenda’.
