By Dhirendra Tripathi
Investing.com – Glencore (OTC:GLNCY) stock (LON:GLEN) traded 1.1% lower in London Monday amid prospects of a battle with an activist investor asking for a spin-off of its coal business.
According to the Financial Times, hedge fund Bluebell Capital Partners - which has taken on both French dairy giant Danone and Belgian chemicals company Solvay (BR:SOLB) in the past - is pushing it to create a separate coal company with Class A and B shares.
Glencore will retain ‘A’ shares, giving it control of the demerged company and marketing rights to all its coal but only a 9.09% economic interest in its operations. Existing Glencore shareholders will get ‘B’ shares and a 90.91% economic interest, according to the FT.
Bluebell partners Giuseppe Bivona and Marco Taricco called on Glencore last year to demerge a thermal coal business that they claimed is turning off investors, leading the rest of the commodities giant to trade at a discount to its true value. Glencore Chief Executive Gary Nagle has come out against a spinoff, arguing that it would be a more environmentally responsible owner of the assets than many alternative owners.
The push by Bluebell is a riff on what has become a widespread theme as investment managers try to attract new customers with narratives of environmentally friendly and socially aware investment approaches. That has put pressure on companies that derive their profits from fossil fuel extraction and processing. Last year, BHP Billiton (ASX:BHP) put its petroleum assets under a separate unit to please such 'ESG' investors.
While the push against fossil fuels gathers pace, the business itself has had a sharp upswing, thanks to the pandemic-induced shortages and booming economies. That has generated record profits at the companies. Glencore's stock price is up over 55% in the last year as a result.