Hedge Funds

Activist hedge fund TCI takes big stake in Royal Mail

LONDON (Reuters) - A hedge fund with a reputation for aggressive campaigning to boost company performance has become the biggest shareholder in newly-privatised Royal Mail after the British government.

The Children’s Investment Fund has bought a 5.8 percent stake in the postal firm, which listed on the London stock market in a high-profile float earlier this month.

According to a regulatory announcement on Tuesday, TCI bought almost 58.2 million shares worth around 286 million pounds at its current share price of 492 pence.

The privatisation of Royal Mail RMG.L has been heavily criticised by opposition lawmakers and labour unions fearful of changes to their pay and conditions.

The shares rocketed almost 50 percent above their 330 pence issue price, sparking criticism that government had undervalued one of Britain’s biggest state sell-offs in decades.

As part of the privatisation, Royal Mail staff will be handed 10 percent of the postal firm. Government currently holds a 37.8 percent stake.

While the influence of activist hedge funds has waned since the credit crisis, publicity-shy TCI is still considered a significant name on a shareholder register.

In August it demanded changes in corporate strategy at aerospace company EADS EAD.PA and in 2007 launched an attack on ABN AMRO that helped trigger the Dutch bank's sale.

Among its high-profile executive scalps is Deutsche Boerse’s then chairman and CEO following a row about its bid for the London Stock Exchange.

But it ran into trouble in a tussle with Japanese electricity firm J-Power, when it lost a reported $130 million, helping push its main fund to a 40 percent loss in 2008.

Chris Hohn, who set up TCI, is estimated to have a 150 million pound fortune, according to this year’s Sunday Times Rich List.

Reporting by Neil Maidment and Laurence Fletcher; Editing by David Cowell