The hedge fund stalking Rolls-Royce is on course to gatecrash the engineering giant’s boardroom after doubling its stake in the troubled company.
ValueAct Capital, a San Francisco-based investor that shuns publicity, now owns 10.01 per cent of the group after taking its holding from 5.44 per cent in August.
The move is the clearest sign yet that the fund will get a place on Rolls-Royce’s board after filing a request to the company’s management for a seat to help turn the battered group around.
A spokesman for the aero-engine maker said: “We are in regular contact with ValueAct, as we are with all our major shareholders. We have a common interest in returning Rolls-Royce to profitable growth. ValueAct has made the request but no decision has yet been taken.”
Rolls-Royce shares slumped by more than a fifth on 12 November after the company issued another profit warning, saying earnings this year would be £650m lower than expected.
Chief executive Warren East is leading a review of the group, and is due to give investors an interim update on his plans later this month.
ValueAct has previously signalled a desire for Rolls-Royce to spin off any of its non aero-engine operations, including a substantial marine business that makes engines for ships.
The shares rose by as much as 1.7 per cent when ValueAct’s stake building was revealed, but ended 0.37 per cent lower despite a rising market for rival manufacturers. ValueAct is understood to have taken its stake privately from 5.4 per cent to 8 per cent during October –and upped its stake above 10 per cent in recent days.
The company is led by the former Fidelity fund manager Jeff Ubben and has a reputation for being less confrontational than other activist investors.
Its biggest coup was gaining a seat on the board of computer giant IBM despite owning a stake of less than a 1 per cent in the business. It has almost no presence in London and operates mainly from its offices on the West Coast.
Rolls-Royce, which has issued five profit warnings in the past 18 months, has been hit by the low oil price and the retirement of planes by Malaysia and Singapore Airlines, which used the company’s Trent 800 engines.
The group made money by servicing these engines but their retirement will leave it about £150m short this year.
ValueAct did not respond to a request for comment.
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