A US activist investor is pushing the board of UK brokerage and trading giant TP ICAP to sell the firm after what it describes as a “disastrous” decline in its share price.
Hedge fund Phase 2 Partners has written to TP ICAP chair Richard Berliand pushing him to explore a sale, after what it said were failures in governance and an inability to arrest a sustained share price slide.
Phase 2, headed up by investor Justin Hughes, said that while the firm has “tremendous assets”, its share price significantly undervalues the firm and the board needed to realise that value for the sake of shareholders.
“We believe it is time for TP ICAP’s board to consider strategic alternatives so that the underlying assets of the this company can be realized and long-suffering shareholders can receive share price that reflects underlying value,” it said in the letter.
TP ICAP’s shares have plunged almost 45 per cent over the past year, and the San Francisco investment firm said there had been little success resulting from the firm’s long-term plans.
Shares in the firm surged 8 per cent on the news today.
Phase 2 said its key concerns with the current governance structure included a lack of management and director ownership, with directors only owning 34 per cent of their combined annual compensation. Management is similarly “under-equitized” and lacks conviction in the firm as an investment, it said.
Other key concerns included a lack of share repurchases, margin deterioration and management that was unresponsive to shareholder concerns.
Justin Hughes said he had been requesting a call with the board for a month but had not heard back from the firm.
“How could you not find any time in the last month to discuss investor concerns? Additionally, as a pretext to the call I was asked for a list of my concerns, seemingly oblivious to the disastrous share price decline you have overseen as Chairman,” he said.
The letter comes after the broker published its full year results last week which showed a dent in its margins, causing its share price to plunge 15 per cent.
A spokesman for TP ICAP in response said the company was maintaining an active dialogue with its investors and is “focused on delivering value to shareholders.”