Jeff Ubben leaves ValueAct for social investment

Activist investor Jeff Ubben left ValueAct Capital, the $ 16 billion hedge fund he founded, to launch a new environmental and social impact investment company.

Ubben’s exit from ValueAct occurs after a one-year power transfer. He handed the position of chief investment officer in 2017 and the position of chief executive officer earlier this year to his chosen successor, Mason Morfit.

“ValueAct should no longer be ‘Jeff Ubben’s ValueAct’,” Ubben told the Financial Times. “I haven’t put a stock in the main fund in three years. . . That’s a problem for ValueAct as they should be able to sideline me. “

Lynn Forester de Rothschild, CEO of the nonprofit group Coalition for Inclusive Capitalism, and two former ValueAct colleagues will join Ubben in their new hedge fund, to be called Inclusive Capital Partners.

You will continue to manage ValueAct’s own $ 1 billion impact fund as your new business takes off. Existing investors in that fund will have the option to transfer their money to the new company.

Environmental and social impact is the logical next step for activist hedge funds, said Ubben, who is famous for a friendlier approach to activism that avoids public battles with target companies in most cases.

He’s looking to emulate the approach he used while running ValueAct’s flagship, where he managed between $ 10 billion and $ 20 billion and invested in a dozen companies at one point, pushing for changes in strategy and staff across the board. target companies.

“Companies, as it is governed today, with investors asking for more current returns and more buybacks, etc., are not working for society or nature,” he said. “But I have to show that there is a return [in long-term impact], because otherwise. . . you’re not really changing anything. “

Activists can still “intimidate small businesses into selling them to private capital,” he said, but doing so will only provide modest gains.

“The finances are already done. Everyone has bought from everyone else with low-cost debt. Everyone has maximized their margin. They have bought back all their shares. . . There is nothing there. Each industry has around three players. Elizabeth Warren is right.

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Having an impact fund and a traditional fund under the same roof at ValueAct was “confusing” for investors, Ubben said. Those who opted for the impact vehicle feared they would leave returns on the table, and those who opted for the flagship fund worried about being portrayed as environmentally or socially unconscious, he said.

“I don’t think these two strategies coexist peacefully,” Ubben said.

On the other hand, putting pressure on companies to tackle environmental and social problems can generate big profits, he said. “When it comes to tackling climate change with a trade solution, that’s the world’s biggest problem. That’s like a 10 times your money deal. “