Activist investor Ubben shutting down Inclusive Capital-sources (updated)
30/11/2023 04:50
(Changes sourcing, adds details on portfolio, background)
By Svea Herbst-Bayliss
NEW YORK, Nov 29 (Reuters) - Jeff Ubben, one of Wall
Street's most prominent activist investors, is shutting down
Inclusive Capital Partners three years after starting the firm
designed to focus on social investing.
Ubben told investors in a memo he was winding down some
funds and returning capital, two people familiar with the matter
said on Wednesday.
Ubben and Inclusive Capital, known as InCap, did not respond
to calls and emails for comment.
The closure of InCap comes as hedge funds struggle to raise
new cash, and as a number of prominent investors have been
wrong-footed by markets gyrating on speculation about interest
rate moves, fears about inflation and geopolitical turmoil.
Last year more hedge funds closed their doors than launched,
data from Hedge Fund Research show.
More than two decades ago, Ubben, 61, who started his career
at mutual fund giant Fidelity, founded ValueAct Capital in San
Francisco. Since 2000 he established himself and the firm as a
powerful but friendly investor more interested in working behind
the scenes with target companies than pushing for change in
public on television or at conferences.
ValueAct, which invested as much as $20 billion over the
years, took stakes in companies ranging from Microsoft to Martha
Stewart Living Omnimedia, and a handful of its top executives,
including Ubben, sat on numerous corporate boards.
After having spent years planning for an orderly succession
at ValueAct and at an age many investors might think of
retiring, Ubben launched InCap in 2020.
The Wall Street Journal first reported that InCap is
returning capital to investors.
The firm was designed as an environmental and social impact
investor that would put money into companies whose businesses
address societal needs. At the time, Ubben said pushing firms to
address environmental and social issues could have big payoffs
and the firm was trying to raise as much as $10 billion.
In 2021, InCap invested in Exxon and Ubben joined the board
as the oil company was facing a board challenge from startup
hedge fund Engine No. 1.
Investors voted to replace three directors with Engine No. 1
candidates but Ubben kept his seat.
In a regulatory filing, InCap said on Wednesday it was
selling two million shares in Exxon worth $216 million,
suggesting the firm was making big changes to its portfolio.
Despite Ubben's strong reputation, people familiar with
InCap's fund raising efforts said it has been tough to raise
cash and noted that investor tastes, especially when it came to
environmental, social and governance issues (ESG), have shifted.
With markets tumbling last year, many investors simply wanted
to see returns instead of focusing on ESG issues.
Additionally some of InCap's public investments have lost
money, people familiar with the portfolio said, noting that
there where also winners and some private investments that
buoyed the portfolio.
This year a handful of the firm's biggest investments,
including specialty chemicals company Ingevity NGVT.N , Bio Rad
Laboratories BIO.N , Unifi Inc UFI.N which manufactures and
sells recycled products, wood pellets maker Enviva EVA.N and
German pharmaceutical and biotech Bayer BAYGn.DE are nursing
double digit losses.
A number of prominent hedge fund managers who have returned
capital to outside investors over the last years, including John
Paulson and Louis Bacon, have continued to invest their own
fortunes through family office structures.
(Reporting by Svea Herbst-Bayliss; Additional reporting by
Sabrina Valle in Houston; Editing by Josie Kao and Miral Fahmy)
((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))