June 23, 2015 / 10:02 PM / 4 years ago

Knight Vinke readies liquid activist fund launch for September

MONACO, June 23 (Reuters) - European investor Knight Vinke will start a new fund in September to open its activist hedge fund strategy to investors looking for daily liquidity and smaller minimum investment, founder Eric Knight said on Tuesday.

Previously, the firm was open to a small group of institutions putting $100 million or more each into its $1.1 billion fund.

Activist investors aim to make money by buying shares of companies and then pushing them to change their strategy. This can include raising their dividend, a share buyback, spinning off a division, or an outright sale of company.

Although a tiny part of the $3 trillion hedge fund industry, the often vocal criticism of management by activists attracts publicity and can improve share price performance.

“It’s a model which is attracting a lot of attention because of the noise which you hear in the U.S. about activist investors,” Knight said in an interview.

Assets managed by activist hedge funds have surged six-fold in the last 10 years to $120 billion, according to a study by the Alternative Investment Management Association.

“Many of the investors are now looking at Europe as the next frontier,” Knight, who unveiled his plans to investors on Tuesday evening at the Yacht Club de Monaco.

Attendees included wealthy individuals, family offices and endowments, all of whom could invest in the new fund that requires relatively lower minimum investment. Knight did not disclose the amount but said it would be significantly lower than his main fund.

Founded in 2002, Knight Vinke’s initial backers included the California Public Employees’ Retirement System.

The firm is known for its activist bets on companies such as Carrefour, UBS Group and Royal Dutch Shell and takes concentrated bets on large companies.

The biggest single stock investment in the main fund, for example, is worth more than $500 million, Knight said without disclosing the company’s name. He said Europe offers a fertile hunting ground for activist investors who are looking for changes at companies through consensual approach.

The fund, which will invest in a handful of Knight’s high conviction large-cap stock ideas, will not charge any performance fee and look to preserve capital by hedging and holding cash, unlike the main fund which remains invested all the time.

Knight Vinke’s main fund is up about 20 percent so far this year. By comparison, the Eurekahedge Hedge Fund Index has gained 4.7 percent. (Editing by Grant McCool)

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