The Children's Investment Fund
Encyclopedia
The Children’s Investment Fund Management (UK) LLP (TCI) is a London‐based hedge fund
founded by Chris Hohn in 2003 which manages The Children’s Investment Master Fund. TCI makes long‐term investments in companies globally. The management company is authorized and regulated in the United Kingdom
by the Financial Services Authority
.
Like most hedge funds, TCI requires investors to commit their capital for multi-year periods. This long-term horizon allows the fund greater flexibility when trading and investing capital independent of any potential ad-hoc time constraints.
, Surrey, in 1967, Chris Hohn is the son of a car mechanic who emigrated to Britain from Jamaica
in the 1960s. Hohn graduated from Southampton University and went on to get his MBA from Harvard Business School
.
(CIFF), set up by Chris Hohn and his wife, Jamie Cooper-Hohn. In an example of "venture philanthropy
", CIFF receives a portion of TCI’s profits and other donations. CIFF focuses on improving the lives of children living in poverty in developing countries, and has grown to be one of the largest charities in the United Kingdom. After suffering a 43% loss during the 2008 calendar year, as of July 2009 the previous financial year had seen a rebound of over 70% profit and revenue for TCI.
.
Some critics believe that it has taken an active role in most situations to promote its own agenda under the guise of sound corporate governance and increase shareholder value. TCI has been a major shareholder of the German stock exchange
Deutsche Börse
where it forced the resignation of the CEO after he refused to abandon his plan to take over the London Stock Exchange
. In 2007, after acquiring 1% of the shares of major Dutch bank ABN AMRO
, TCI led an attack demanding the bank split up or sell to the highest bidder to produce shareholder value. ABN was ultimately split and sold to Royal Bank of Scotland
(RBS), Fortis
, and Banco Santander and was a major contributing factor in the downfall of both RBS and Fortis. In June 2007, TCI failed in its attempt to get the Japanese utility J-Power, in which it had acquired a 10% stake, to boost its dividend. The general meeting of shareholders rejected the proposal, prompting a severe selloff in the stock.
In 2006, as a shareholder of both Mittal Steel Company
and Arcelor
, TCI supported Mittal Steel in the company's unsolicited takeover offer for Arcelor. However, when Mittal Steel subsequently attempted to acquire Arcelor Brasil (one of Arcelor's subsidiaries) without an appropriate premium, TCI defended the rights of Arcelor Brasil’s minority shareholders, causing Mittal to raise its offer price more than 55%.
In 2008 the company was suffering from heavy losses but recovered very well and assets under management reportedly stood around $ 6 Billion earlier this year.
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
founded by Chris Hohn in 2003 which manages The Children’s Investment Master Fund. TCI makes long‐term investments in companies globally. The management company is authorized and regulated in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
by the Financial Services Authority
Financial Services Authority
The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...
.
Like most hedge funds, TCI requires investors to commit their capital for multi-year periods. This long-term horizon allows the fund greater flexibility when trading and investing capital independent of any potential ad-hoc time constraints.
Chris Hohn
Born in AddlestoneAddlestone
Addlestone is a town in the borough of Runnymede in the county of Surrey, England.Immediate surrounding towns and villages include Weybridge, Ottershaw, Chertsey, and New Haw. It is near Junction 11 of the M25 motorway and is served by Addlestone railway station on the Chertsey Branch Line. It also...
, Surrey, in 1967, Chris Hohn is the son of a car mechanic who emigrated to Britain from Jamaica
Jamaica
Jamaica is an island nation of the Greater Antilles, in length, up to in width and 10,990 square kilometres in area. It is situated in the Caribbean Sea, about south of Cuba, and west of Hispaniola, the island harbouring the nation-states Haiti and the Dominican Republic...
in the 1960s. Hohn graduated from Southampton University and went on to get his MBA from Harvard Business School
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
.
Charity
TCI derives its name from a charitable foundation called The Children's Investment Fund FoundationThe Children's Investment Fund Foundation
The Children's Investment Fund Foundation UK is a large charitable organization in the United Kingdom.It was founded in 2002 by hedge fund manager Chris Hohn and his wife Jamie Cooper-Hohn....
(CIFF), set up by Chris Hohn and his wife, Jamie Cooper-Hohn. In an example of "venture philanthropy
Venture philanthropy
Venture philanthropy, also known as philanthrocapitalism, takes concepts and techniques from venture capital finance and high technology business management and applies them to achieving philanthropic goals.Venture philanthropy is characterized by:...
", CIFF receives a portion of TCI’s profits and other donations. CIFF focuses on improving the lives of children living in poverty in developing countries, and has grown to be one of the largest charities in the United Kingdom. After suffering a 43% loss during the 2008 calendar year, as of July 2009 the previous financial year had seen a rebound of over 70% profit and revenue for TCI.
Investor activism
TCI has a reputation for aggressive shareholder activismActivist shareholder
An activist shareholder uses an equity stake in a corporation to put public pressure on its management. The goals of activist shareholders range from financial to non-financial...
.
Some critics believe that it has taken an active role in most situations to promote its own agenda under the guise of sound corporate governance and increase shareholder value. TCI has been a major shareholder of the German stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
Deutsche Börse
Deutsche Börse
Deutsche Börse AG is a marketplace organizer for the trading of shares and other securities. It also is a transaction services provider. It gives companies and investors access to global capital markets. It is a joint stock company and was founded in 1993. The headquarters are in Frankfurt,...
where it forced the resignation of the CEO after he refused to abandon his plan to take over the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
. In 2007, after acquiring 1% of the shares of major Dutch bank ABN AMRO
ABN AMRO
ABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. It was re-established, in its current form, in 2009 following the acquisition and break up of ABN AMRO Group by a banking consortium consisting of Royal Bank of Scotland Group, Santander and Fortis...
, TCI led an attack demanding the bank split up or sell to the highest bidder to produce shareholder value. ABN was ultimately split and sold to Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...
(RBS), Fortis
Fortis (finance)
Fortis N.V./S.A. was a company active in insurance, banking and investment management. In 2007 it was the 20th largest business in the world by revenue but after encountering severe problems in the financial crisis of 2008, most of the company was sold in parts, with only insurance activities...
, and Banco Santander and was a major contributing factor in the downfall of both RBS and Fortis. In June 2007, TCI failed in its attempt to get the Japanese utility J-Power, in which it had acquired a 10% stake, to boost its dividend. The general meeting of shareholders rejected the proposal, prompting a severe selloff in the stock.
In 2006, as a shareholder of both Mittal Steel Company
Mittal Steel Company
Mittal Steel Company N.V. was one of the world's largest steel producers by volume, and also one of the largests in turnover. The company is now part of ArcelorMittal....
and Arcelor
Arcelor
Arcelor S.A. was the world's largest steel producer in terms of turnover and the second largest in terms of steel output, with a turnover of €30.2 billion and shipments of 45 million metric tons of steel in 2004...
, TCI supported Mittal Steel in the company's unsolicited takeover offer for Arcelor. However, when Mittal Steel subsequently attempted to acquire Arcelor Brasil (one of Arcelor's subsidiaries) without an appropriate premium, TCI defended the rights of Arcelor Brasil’s minority shareholders, causing Mittal to raise its offer price more than 55%.
In 2008 the company was suffering from heavy losses but recovered very well and assets under management reportedly stood around $ 6 Billion earlier this year.
Articles
- Financial Times: Feared fund turns to business of charity By James Mackintosh July 2 2007
- Management Today: The new new philanthropists by Ian Wylie October 1 2007
- Spectator: The real driving force in the battle for ABN by Matthew Lynn May 9 2007
- Financial News: Financial News 100, 2007
- The Economist: Leader of the swarm July 12 2007
- The Independent: Financier in record £230m donation to charity by Arifa Akbar July 3 2007
- HFM Week: Blog, 2011