Credit Suisse Activist Seeks $1 Billion to Back Breakup PlanBy and
Activist firm RBR currently oversees just 250 million francs
Biggest Credit Suisse shareholder opposes breakup plan
Rudolf Bohli, the activist hedge-fund manager pushing for a breakup of Credit Suisse Group AG, said he’s in talks with more than 150 potential investors with the goal of raising 1 billion francs ($1.02 billion) for his campaign.
Bohli, whose firm RBR Capital Advisors AG currently manages about 250 million francs, said most of the potential backers he pitched on his idea aren’t Credit Suisse shareholders. He said he was confident he could raise the funds in coming months based on those discussions, without providing details.
“There is a huge interest in this because the whole banking sector has not been disrupted really," Bohli said in an interview. "A lot of the investors we talk to see this opportunity."
Bohli, whose firm owns about 0.2 percent of the Swiss lender, is urging Credit Suisse to be split into three companies, arguing such a move would double the bank’s current market value of about 40 billion francs.
His plan has been dismissed by the company and its biggest shareholder, Harris Associates, which owns 9 percent of Credit Suisse. David Herro, a partner at Harris, has said while elements of the proposal should be looked at, Bohli’s valuations were “pie in the sky” and the investor has too little “skin in the game.”
“We are fully supportive of the Credit Suisse management and do not support RBR’s plan to split up” the bank, Herro said by email.
Bohli said in a Bloomberg TV interview with Erik Schatzker on Friday that his discussions with Credit Suisse Chief Executive Officer Tidjane Thiam had been “actually very friendly,” calling the CEO “a great guy.” The investor said he believes Thiam will ultimately go along with his proposals.
Bohli’s approach is unusual in the world of shareholder activism, where hedge fund managers typically raise money first to take a large stake in a company, before pushing management to make changes. Bohli, who presented his plan for the first time in public at the Robin Hood Investors Conference in New York on Friday, is hoping his strategy is attractive enough for investors to sign on to the idea.
Now that his proposal is public, it’s not clear what incentive a potential investor would have to commit to his fund, rather than buy shares in Credit Suisse directly and save the fund fees. Bohli said the investors he pitched so far have signed non-disclosure agreements. Investing alongside RBR gives stakeholders an opportunity to clearly embrace RBR’s plan and will give it more weight with the company, Bohli said.
The activist investor said that if shareholders, management and the board don’t find merit in his plan, he would walk away.
“It’s not an ego trip,” Bohli said.
Bohli is supportive of the current board and management, and said they were well suited to implement his proposal after they finish their current three-year plan. The Swiss lender two years ago started a restructuring led by Thiam, downsizing volatile trading operations and focusing more on managing money for the wealthy. A cornerstone of that strategy is to focus the investment bank more on the needs of the bank’s wealth management clients.
When asked about job cuts, Bohli said there will be some redundancies if his plan is implemented but that it would lead to more jobs in the long run. He said Credit Suisse has too many traders.
Founded in 2003, RBR specializes in continental European equities, including long-short strategies. Assets have declined from a peak of about 800 million francs before the financial crisis, according to an outside spokesman. The activist strategy was started when the firm in 2014 took a stake in Switzerland’s Gategroup Holding AG. More recently, RBR unsuccessfully attempted to oust the CEO of GAM Holding AG, a Swiss asset-management firm.