Hohn’s Wife Loses Ruling on Value of TCI Stake in DivorceAndrea Gerlin and Lindsay Fortado
The wife of Christopher Hohn, the founder of The Children’s Investment Fund Management UK LLP, can’t introduce a report about the value of his stake in the fund’s management companies in what will be one of the U.K.’s largest divorce cases.
Jamie Cooper-Hohn can’t submit expert evidence to support her claim that his share of the business should be valued at more than $800 million, a London court ruled today. Hohn’s lawyer said at a hearing before the ruling that she is entitled to about a quarter of his stake in the hedge-fund management companies of TCI, which he valued at about $100 million and are wholly owned by him. Cooper-Hohn, 49, argues she is owed half.
Hohn, 47, is well-known for his activist investing, buying large stakes in companies and pressuring management to make changes that might drive up the share price. His hedge fund, known as TCI, owns stakes in Moody’s Corp. and Royal Mail Plc, according to Bloomberg data. The fund has about $8 billion in assets under management, her lawyer, Martin Pointer, said in court documents.
“He has spent his whole life making money,” Pointer said at the hearing.
Cooper-Hohn lost the ruling because any value would be “hypothetical,” and “some assets cannot be ascribed a capital value,” the judges said.
Hohn and Cooper-Hohn have four children, including triplets. Cooper-Hohn, the chairman of the couple’s charity, Children’s Investment Fund Foundation, filed for divorce in March 2012, her lawyer said in court papers.
A lower court had said in April that some assets can’t be included in the valuation of Hohn’s worth because they depend on his involvement in the business and the value is speculative.
While Pointer said the stake was worth $800 million during today’s hearing, the expert report commissioned by Cooper-Hohn valued Hohn’s stake in the funds from 513 million pounds ($869 million) to 872 million pounds, according to court documents.
Lewis Marks, Hohn’s lawyer, said the hedge-fund founder was similar to a professional athlete who forms a company to exploit his skill and talent and hires a trainer, coach, physiotherapist and other support staff.
If Hohn were to leave, someone else couldn’t just step into his shoes, Marks said. He makes all the investment decisions and is the “regulated person” in the eyes of the financial regulators.
“Without him, there is no business,” Marks said. “If the husband leaves the business, there is nothing left behind, even if the support staff are well paid.”
Cooper-Hohn’s lawyer said in court documents that although he played an “important role” in managing the fund, he recently disclosed that other employees would share in a performance bonus pool of 26 million pounds for 2013.
“He does not act alone,” Cooper-Hohn’s lawyer said. “Such a level of payment necessarily indicates their importance to the business.”
Hohn has generated wealth of about $5.7 billion in his working life, including $4.3 billion for charity and $1.36 billion now owned by the couple, Pointer said.
“We don’t accept that analysis by him that it’s wholly dependent on him, or that he can just walk away from it and there will be no residual value,” Pointer said.
Hohn listed his gross assets in the divorce case in December 2012 as $889 million, his lawyers said in court papers today.
London has been called the “divorce capital” of Europe by lawyers and some judges because of U.K. rulings that were criticized as too generous to the spouse who makes less money, often the wife.
In 2007, John Charman, chief executive officer of Axis Capital Holdings Ltd., lost an appeal against a court ruling that he pay his ex-wife 48 million pounds in what was then considered the largest U.K. divorce award. That amount was surpassed last year by a 55 million-pound settlement in a case called M v M, the Evening Standard newspaper said.