Activist investor Coast Capital, which is demanding an overhaul of bus and rail operator First Group, has received the backing of two major fund managers.
Schroders and Columbia Threadneedle Investments, which own nine per cent and 10 per cent of First respectively, are opposing the re-election of the company’s chairman Wolfhart Hauser at an extraordinary general meeting tomorrow, Sky News reported.
“We have voted against the incumbent chairman and two of the longest-serving board directors,” a Columbia Threadneedle spokesperson said. “We have taken this action to better realise value for shareholders.”
James Rasteh, Coast’s chief investment officer, said: “We are thrilled and grateful and believe there are many more to come.”
Coast Capital, which holds a near 10 per cent stake in the firm, is calling for a refresh of First’s directors and for the company, which runs the South Western and Transpennine rail franchises, to exit the UK rail market.
The New York hedge fund has also demanded that First splits its UK assets from its US assets and overhauls its board by appointing six of Coast’s candidates.
Last month First agreed to split up the group and said it had “concerns with the current balance of risk and reward” of UK rail franchises.
However, yesterday Coast said the news that First is set to win the West Coast rail franchise is a “disturbing allegation”.
James Rasteh, Coast’s chief investment officer, told City A.M: “There is no doubt that winning the West Coast franchise will result in further value destruction in a UK rail business which has already destroyed vast amounts of shareholder capital.
City A.M has contacted Schroders for comment.