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ValueAct Environmental Push Adds Textiles-From-Bottles Maker

Updated on
  • Firm takes 5% stake in recycled-products company Unifi
  • $250 million ValueAct Spring fund includes power producer AES

Jeff Ubben’s ValueAct Capital Management has taken a 5 percent position in a company that makes polyester and nylon textiles out of recycled plastic bottles, as part of the activist fund’s push into environmentally focused investing.

Unifi Inc., based in Greensboro, North Carolina, has developed technology using plastic bottles to make high-performance fibers for Ford Motor Co. seats, Patagonia Inc. clothing and Fossil Group Inc. bags, among other products, according to its website.

“Unifi has a long history as a trusted partner to global brands,” Ubben said in an email. “Being a key part of the soft goods supply chain, the company has committed to making long-term investments toward satisfying increased consumer demand for recycled products and reducing environmental impact.”

Shares in Unifi had declined about 12 percent through Friday’s close, giving it a market capitalization of about $580 million. It rose as much as 3.9 percent in early trading Monday before settling up about 1 percent to $31.95 as of 12:57 p.m. in New York.

Plastics recycling in the U.S. has declined and Unifi’s textiles offer a solution through its Repreve fiber products, Ubben said.

Unifi Chief Executive Officer Kevin Hall said the company with its partners has already recycled 10 billion plastic bottles and intends to reach 30 billion by 2020. “We welcome ValueAct on this very important journey,” he said in an email.

The investment is the latest for a new ValueAct fund focused on social and environmental investments.

The $250 million ValueAct Spring Master Fund LP has disclosed investments in international power producer AES Corp., where Ubben was also awarded a board seat, education company Strayer Education Inc. and wood-pellet manufacturer Enviva Partners LP. Ubben has said the fund has two other undisclosed investments.

Strong Returns

San Francisco-based ValueAct said in a January letter to investors that the Spring Fund, launched that month, isn’t mere altruism. The fund will look for strong returns from portfolio companies, ValueAct said.

ValueAct hired Eva Zlotnicka, who previously led Morgan Stanley’s U.S. sustainability research team, to help guide the fund. ValueAct has been tapping experts in energy, electrification, water, agriculture, education and human rights to help find the right investments, Ubben said in the letter.

The hedge fund had originally sought to raise $100 million for the fund but has more than doubled that goal.

“The sizing of the fund reflects our interest to walk before we run,” Ubben said in the January letter. “We believe the opportunity could be enormous if we can prove out the valuation creation to this adapted form of active governance investing.”

(Updates with share price in fourth paragraph.)
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