Sunday, 10 March 2019

Interserve & hedge funds

The ongoing battle at Interserve is grimly fascinating. The company's biggest shareholder is hedge fund Coltrane Asset Management which is trying to scupper the board's plans for a debt-for-equity swap. This would (obviously) be bad news for existing shareholders, but it looks like the company would go into administration if its plan does not proceed as planned.

There is come great coverage in the Sunday Times today, including an interview with the chief exec Debbie White. She argues: "People seem to have lost sight of 68,000 people's livelihoods [and] thousands of clients and suppliers for whom Interserve is an integral part of their lives."

I'm interested in Coltrane's role as a shareholder, as I've primarily come across them on the short side. They had a smallish short position in Carillion before it failed, and currently has a fairly sizeable short in Mitie Group. Here are its current shorts above 0.5%:

Funnily enough, there's another hedge fund I've come across several times - Davidson Kempner - on the debt side of Interserve.

By the by, Davidson Kempner currently has no shorts listed in the FCA list. In fact it hasn't had any in the list since April 2018 when it wound down its long/short merger arbitrage trade around the takeover of GKN by Melrose. Perhaps it's not shorting anymore, or perhaps it has some sitting at 0.49% or below. The more I dig into this stuff the more I wonder why the FCA sets the bar so high for disclosure.

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