Dan Loeb’s hedge fund Third Point was one of several winners from electric vehicle startup Rivian’s blockbuster US IPO earlier this month, scoring a $300m profit as it hit the market.
Third Point’s stake in Rivian, whose $100bn IPO was the biggest market debut in the world this year, was accumulated over the last twelve months after billionaire investor Loeb made a series of investments, the FT first reported.
These included a $167m investment this summer in the EV maker’s convertible note, according to investor letters seen by the newspaper, which Third Point then switched to shares at the time of the IPO.
The hedge fund, which has $20bn under management, has made a series of large gains as private companies IPO and is up almost 36 per cent in the first ten months of the year – its best year of returns in more than a decade.
In a letter to investors on November 10, the day Rivian went public, Third Point said it had made a 640 per cent gross internal rate of return, the performance metric used by the buyout industry.
Meanwhile, Rivian hit the market with a bang as its shares surged as much as 53 per cent on its Nasdaq debut, sending its valuation north of $100bn – more than Ford or General Motors.
Wall Street heavyweights, including BlackRock and T. Rowe Price, are betting on Rivian becoming the next big thing in the EV space and taking on Tesla, despite the fact it has only ever delivered under 50 vehicles, and has suffered almost almost $2.4bn losses in the last two and a half years.
Nevertheless, Loeb lauded the Rivian’s chief executive RJ Scaring in a recent investor letter seen by the FT and said he was “deeply impressed by his charismatic vision and approach to designing a new type of automotive company”.
Amazon is Rivian’s largest shareholder, with a 20 per cent stake, followed by Ford, which reportedly holds a 12 per cent stake.
After the EV maker priced its shares at $78 for its offering, they leaped to as much as $170 last week and have since retreated to around $116, after Ford ditched plans to use its technology for a new electric vehicle.