Hedge fund glides into Rolls-Royce

AN ACTIVIST hedge fund based in San Francisco has become one of Rolls-Royce’s biggest shareholders.

ValueAct said in a regulatory filing that it has acquired a 5.44pc stake in the troubled British engineering giant.

The announcement helped add £820m to Rolls-Royce’s market value as shares surged almost 6pc, or 44.5p, to 794p.

It joins fund manager Aberdeen Asset Management, which has a 5.59pc stake, at the top of the shares register.

Its arrival comes at a pivotal time for Rolls, which has seen its share price crash 25pc over the past year. The Derby-based firm recently issued its fourth profits warning in 18 months and this week announced a 57pc slump in profits.

Warren East, former boss of software company ARM Holdings, has replaced John Rishton as chief executive to lead the turnaround.

ValueAct, founded by veteran investor Jeff Ubben, has made a name for itself by working behind the scenes at firms to force change.

Rolls-Royce said it had worked with ValueAct in the past and would meet the hedge fund soon. It added: ‘We constructively engaged with them before. We welcome any investor who recognises the long-term value of our business.’

A commentator last night suggested that ValueAct is betting the shares will fare well under new leadership and is not necessarily looking to shake things up.

David Buik from broker Panmure Gordon said: ‘My initial thoughts are that this US investor... thinks it’s a recovery position and has said “I’ll have a big piece of that.” ’