The hedge fund manager attempting to oust the chairman of the London Stock Exchange (LSE) has received the backing of a top-five investor ahead of a shareholder vote on Tuesday.
US firm Lone Pine Capital will back the resolution of Sir Chris Hohn, manager of The Children’s Investment (TCI) fund, to remove Donald Brydon from the board, according to the Sunday Telegraph.
However, Standard Life Aberdeen will back the LSE board, highlighting the investment community split over whether to back Hohn’s campaign, which was spurred by what he thought was an arbitrary dismissal of the former chief executive, Xavier Rolet.
Read more: Blackrock latest massive investor to back London Stock Exchange chairman
Major, long-term institutional investors keen to move past the dispute have lined up behind the LSE’s board, with Standard Life Aberdeen the latest to add its backing, along with Blackrock, the Qatar Investment Authority, and Aviva.
Meanwhile, the LSE has already conducted multiple interviews with prospective candidates to take up the chief executive reins, in a sign that Brydon – who will retire in 2019 – is moving ahead apace in re-establishing a top team.
However, Connecticut-based Lone Pine is the second hedge fund so far to support Hohn, along with Egerton Capital, run by John Armitage.
The meeting, to be held at a Southwark hotel, will provide the culmination of a battle which started abruptly in November when Hohn was not satisfied by the reasons for Rolet’s departure given by the board.
Read more: TCI sets out reasons to oust the London Stock Exchange’s chairman
As much as two-thirds of the vote is expected to have been submitted already before a Saturday deadline for proxy votes, based on similar meetings in the past. Hohn’s campaign is widely thought to be very likely to fail to win a majority, with attention now turning to the size of the shareholder rebellion against the board.
TCI, which will have some form of representation at the meeting, argues the LSE board did not follow an acceptable corporate governance procedure, declining to inform shareholders of its reasons for removing Rolet.
Meanwhile, investor advisors at the Pensions and Investment Research Consultants (Pirc) have accused Brydon of presiding over a “governance crisis”, recommending an abstention in the vote.
A City source said that while TCI may need 50 per cent to win, it does not need 50 per cent to send a clear message to the board about correct corporate governance.
The board appears to have done enough to fend off the activist investors, but the confusion has “irritated” many in the City who would like to see Brydon hand over to another chairman, according to David Buik of stockbroker Panmure Gordon.
Lone Pine could not be reached for comment, while Standard Life Aberdeen, the London Stock Exchange and a spokesperson for TCI declined to comment.
Read more: LSE’s chairman bruiser bruised but unbowed