Drugs giant GSK top of hit list for new £500m activist fund

Glenn Cooper, the activist City investor who took on Vodafone's management last year, is raising a £500m fund to shake up some of Britain's biggest companies, such as GlaxoSmithKline (GSK).

Mr Cooper, the former investment banker who masterminded the flotation of Manchester United in the early 1990s, is believed to be speaking to new investors in Europe and the US, with a number of big American pension funds already pledging their support for the new war chest.

Pharmaceuticals giant GSK, chaired by former Vodafone boss Sir Christopher Gent, is thought to be one of the companies on Mr Cooper's hit list. Worth £60bn on the stock market, GSK is in the midst of a turnaround plan being implemented by its new chief executive, Andrew Witty, who took over the reins in May. GSK's shares closed at 1144p on Friday, down from the year's high of 1403p. Along with the rest of the sector, GSK has been hit by the growth of generic drugs.

Charles Stanley, the broker, said in a recent note: "Our suspicion is that it could take many years for the perceived benefits to materialise and, as a consequence, in terms of our estimates these [Witty's] plans are not critical."

Mr Cooper, beside the former Marconi boss John Mayo, took on Vodafone through their investment vehicle, Efficient Capital Structures (ECS), demanding that Vodafone's 45 per cent holding in Verizon Wireless be spun off – with the cash handed back to shareholders.

The campaign gained some support from some of the City's biggest names, including Jupiter Asset Management and Neil Woodford of Invesco Perpetual, as well as the world's biggest pension fund, Calpers, the pension scheme for California's state employees.

Mr Cooper and Mr Mayo were ultimately unsuccessful. Vodafone's chief executive, Arun Sarin, has since left and the company's share price has held up better than many predicted.

One City insider said: "Cooper is old school – a bit more aggressive than most. He made a decent fist of having a go at Vodafone so I can't imagine chief executives will want him on their share register in the future."

Mr Cooper's new fund comes at a tough time for activist investors, following the poor timing of the Monaco-based hedge fund, Knight Vinke, which sought the shake-up of HSBC.

Knight Vinke, led by Eric Knight, presided over an expensive campaign of "moral suasion" that pushed for the sale of HSBC's ailing American subsidiary. But the plan has failed, with shares in HSBC among the best performing in the UK banking sector, and, it is not participating in the Government's bailout plan.

Knight Vinke currently has its sights set on four, as yet unnamed, European energy companies, under the moniker "Project Adriatica".

Alongside Knight Vinke, the activist hedge fund The Children's Investment Fund (TCI), led by Chris Hohn, is struggling – the group lost 15 per cent of its value last month.

Mr Hohn, whose intervention last year spawned the break-up and ultimate sale of the Dutch banking group ABN Amro, has urged investors to "have patience to ride out this storm".

In a rare interview recently, he claimed to be suffering from "battle fatigue", adding: "This has been a brutal period for long-biased investors like us, who have limited hedges, and it is painful to lose money. We are going to be more cautious when we look at making new investments, because, quite frankly, activism is hard."