A group of investors, including Invesco (IVZ), Janus Henderson (JHG), Pelham Capital Ltd., and Global Value Fund, have come together to request a change in a London-listed investment vehicle managed by Trian Fund Management LP.
The group of investors claims that Trian has deviated from its original purpose that was laid down at the time of its listing in 2018. Together, they served notice to the company’s board to convene an extraordinary general meeting of its shareholders and reshuffle its current directors.
Founded in 2005 by Nelson Peltz and other founding partners, Trian Fund Management, L.P. is a multi-billion dollar investment management firm that offers portfolio management and advisory services to individuals, institutions, trusts, private funds, charitable organizations, and investment companies worldwide.
Based in Guernsey, Trian Investors 1 Limited’s investment objective is to generate significant capital appreciation through the investment activities of Trian Investors Management, LLC and its parent, Trian Fund Management, L.P.
Nelson Peltz, who co-founded Trian Fund Management, is well-known for high-profile activist investor campaigns, including in Unilever (GB: ULVR), among others, wherein he acquires stakes in companies, demands board seats, and agitates for strategic changes.
Details of the Complaints
The group of investors is seeking the removal of current board members, Chris Sherwell, Simon Holden, and Anita Rival. Furthermore, in their place, the group has proposed two new directors, Robert Legget (Independent, Managing Director at Progressive Value Management Limited) and Miles Staude (Manager of the Global Value Fund).
Expressing their concerns, the investors stated that they seek to “achieve an acceptable standard of governance and restore the trust and confidence of the independent shareholders.”
This was stated regarding the AGM held in 2021, whereby significant changes were made to Trian’s investment case versus the original terms laid out in 2018.
The mandate changed from investing in a single, publicly-listed company to being able to own multiple investments simultaneously.
Further, Trian was originally meant to be a minority shareholder but was modified to become a majority shareholder, or even fully own the companies.
To add to that, instead of returning all profits generated after exiting an investment, the firm can now reinvest all of the company’s capital arising upon disposal.
They further alleged that the voting at the AGM in 2021 was not appropriate as Trian and Jefferies (financial adviser to the company), both owning 28.6% of the company together, voted in favor of the resolutions.
They claimed that both parties had vested interests and should have abstained from voting on this resolution.
Trian’s Response
In response to the group’s call, Trian Investors 1 stated in a securities filing that it has acted in a responsible manner and is reviewing the request for the meeting and the required changes on the board.
The Board stated, “That it has consistently acted responsibly, upholding the standards expected under the UK Code of Corporate Governance and has effectively discharged its fiduciary duties.”
The Board further added, “The board is in the process of reviewing the content and legality of the request with its advisers and a further announcement will be made in due course. The board welcomes input and views from all stakeholders.”
Wall Street’s Take
Overall, Invesco stock has a Hold consensus rating based on three Buys and nine Holds. The average Invesco stock forecast of $22.83 implies 38.15% upside potential from current levels.
Conclusion
Investors have raised a number of red flags and are demanding a powerful shareholder response.
Notably, Aegon Asset Management UK is allegedly supporting the resolutions being proposed at the EGM. Together, Aegon Asset Management UK and the above-mentioned group of investors account for 43.6% of Trian shareholders.
It remains to be seen how Nelson Peltz deals with the turn of events in the days to come.
