The chair of Third Point Investors Ltd, a London-based investment fund connected to Dan Loeb’s activist group, has stepped down after he received “personal threats” amid an escalating fight with rebel investors.
Steve Bates, a former US equity analyst and JPMorgan executive who had been chair since 2019, decided that “circumstances have rendered his continued service as a director of the company untenable”, a statement from the board said on Thursday.
The decision follows meetings between TPIL and activist investors Asset Value Investors and Staude Capital. AVI owns about 10 per cent of the listed vehicle and is the largest shareholder behind Loeb.
Bates’s exit marks the latest twist in a spat that has pitted Loeb, one of the world’s toughest activists, against a group of dissenting shareholders. On Thursday, Loeb called the activists a “stain on institutional investors” and said that their “juvenile antics smack of desperation and inexperience”.
Tom Treanor, director at AVI, said in a statement to the Financial Times that it was “unfortunate” that Bates had resigned but it was “not at all surprising”. He pointed to Bates being “under pressure from the manager” and what he considered to be “misleading narratives being put out under the board’s name”.
TPIL is a £650m closed-ended fund that is listed on the London Stock Exchange and invests directly into Third Point’s flagship hedge fund, which manages about $20bn in assets. A spat has been rumbling for some time over a valuation discount between the main fund and the London-listed feeder fund.
Loeb is known for the tough tactics he has taken in activist fights with public companies where he has invested, most recently Royal Dutch Shell. Third Point has built a large stake in the oil supermajor and called for it to break itself up.
But at his UK-listed investment vehicle, Loeb is facing a taste of his own medicine. Since May, the £1.2bn London-based AVI has publicly criticised TPIL’s performance, governance and measures to close the discount with the flagship hedge fund.
Loeb scored a victory this month when he won a crucial shareholder vote that defeated a motion, backed by AVI and another investor Staude Capital, to remove Third Point general counsel Josh Targoff from TPIL’s board. Shareholders also voted in favour of an exchange mechanism which is designed to help reduce the discount.
AVI’s Treanor said claims that shareholders had rejected its motion as an activist intervention “is a gross distortion of reality”. It was only defeated, he said, by “votes controlled by the ‘VoteCo’ entity which owns no economic stake in the company”, he said. “This raises serious questions around governance at the company.”
Since the vote, TPIL has engaged privately with representatives of AVI and Staude Capital, it said on Thursday. From the company’s side, these in-person meetings were attended by Bates and an adviser.
An activist during one of these meetings made “personal threats” against Bates, saying that should he refuse to “accede to their proposals, they would attack him in other business areas”, the TPIL statement said. “This naturally raised a business conflict for Mr Bates.”
TPIL director Rupert Dorey said: “The board is appalled that Steve has been put in a position where he has decided to leave the board, but understands his reason for doing so.”
Bates said: “I very much regret having to leave the board but have recently been put in a position where it is impossible for me to continue as a director of TPIL.”
Loeb criticised the tactics of his adversaries. He said in a statement on Thursday: “The behaviour by these so-called ‘activists’ is a stain on institutional investors who attempt to engage constructively with boards and management teams. Being a successful activist requires moving on when shareholders reject your plans rather than resorting to underhanded tactics. These juvenile antics smack of desperation and inexperience.”