The Children's Investment Fund Management

The Children’s Investment Fund Management

The Children’s Investment Fund Management (TCI) is a London‐based hedge fund management firm 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.

The child investment derives its name from a charitable foundation called The Children’s Investment Fund Foundation (CIFF), set up by Chris Hohn and his ex-wife, Jamie Cooper-Hohn. In an example of “venture philanthropy”, CIFF initially received 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.

Through changes set in motion in 2012, the fund and foundation were split up. The fund no longer donates money to the foundation on a contractual basis, though it may do on a discretionary basis.

Investor activism

TCI has a reputation for aggressive shareholder activism. 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 Borse 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%.

TCI initiated legal action against the Government of India using provisions in the bilateral trade treaty between United Kingdom and India regarding the under pricing of coal by Coal India Limited,in which TCI holds 1% stake.