Relational Said to Replace Current Fund Amid Whitworth LeaveBeth Jinks
Activist fund manager Relational Investors LLC will wind down its current fund by the end of next year because of co-founder Ralph Whitworth’s medical leave and will start a new fund in 2015 to see through unfinished campaigns, people with knowledge of the matter said.
The current fund is being dissolved because key-man provisions -- measures in place in the event that a principal’s contribution is diminished for some reason -- have been triggered by Whitworth’s absence while he receives treatment for his health, said the people, who asked not to be identified because the information is private.
The new fund is expected to be co-chaired by firm co-founders David Batchelder and Whitworth, who Relational anticipates will return to a more active role following medical treatment, the people said. Additional principals will be added to oversee daily management.
The reconstituted fund will include the remaining stocks Relational is already active in. Some current campaigns may be resolved before the existing fund is wound down, the people said. In July, Relational said it wouldn’t seek new target companies while Whitworth was on leave to address his health, opting to focus instead on existing investments.
“Relational intends to continue to aggressively pursue the activist agendas on its portfolio companies,” Batchelder said yesterday in a phone interview. “There’s been no change there.”
The fund dissolution plan was reported earlier by the Wall Street Journal.
Batchelder and other senior management assumed Whitworth’s duties in mid-July when the firm announced that Whitworth was taking a leave and resigned as chairman of Hewlett-Packard Co., a Relational target he helped reshape. Whitworth has cancer, people with knowledge of the matter said earlier this year.
Relational currently has investments in industrial companies including equipment manufacturer SPX Corp., bearings maker Timken Co. and machinery builder Illinois Tool Works Inc. This year, Relational has actively sought changes at companies including aircraft seat maker B/E Aerospace Inc., crane and refrigerator builder Manitowoc Co., and hazardous waste disposer Clean Harbors Inc.
After working with billionaire Texas oilman T. Boone Pickens, Whitworth and Batchelder founded Relational in San Diego in 1996 with $200 million from the California Public Employees’ Retirement System, the nation’s largest public pension fund.
Whitworth and Batchelder manage more than $6 billion, buying stakes in public companies they consider undervalued and lobbying executives and directors for changes to boost returns. Relational’s activism can lead to the ouster of chief executive officers and board seats for the fund.