Dan Loeb Risks Winning a Pyrrhic Victory in UK Trust Fight
The hedge fund manager’s plan to merge a London-listed investment vehicle with an insurance company needs to deliver value for shareholders.
Hedge fund billionaire Dan Loeb risks winning a pyrrhic victory in his efforts to merge a UK investment trust with an insurer.
Photographer: Reinhold Thiele/Hulton Archive/Getty Images
US hedge fund manager Dan Loeb has all but won the battle to reinvent his ailing UK investment trust as an insurance company mimicking mighty private asset manager Apollo Global Management Inc. Along the way, this tiny transaction has become symbolic of the awkward choice facing London stock-market members who are struggling — liquidate, or change strategy.
Third Point Investors Ltd. is a UK-listed closed-end fund that invests in Loeb’s New York-based Third Point LLC hedge fund. As a London stock, it’s arguably failed, having long traded at a wide discount to the underlying value of its holdings. The standard fix — buying back cheap stock — hasn’t worked. The simple, albeit somewhat drastic, remedy would be to sell the assets, return the cash to shareholders and shut down. Instead, the board opted to transform the firm by merging with — and thereby becoming — an insurance company, Malibu Life Reinsurance SPC. TPIL’s assets will become capital to fund Malibu’s growth.