The Children's Investment Fund

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Categories: Economics and finance stubs | Hedge funds

The Children’s Investment Fund Management (UK) LLP (“TCI”) is a London‐based hedge fund founded by Chris Hohn in 2003 which manages The Children’s Investment Master Fund. TCI makes long‐term investments in companies globally. The management company is authorized and regulated in the United Kingdom by the Financial Services Authority. A portion of TCI’s profits go to The Children’s Investment Fund Foundation, a non‐profit organization focused on improving the lives of children living in poverty in developing countries. TCI derives its name from its annual donations to a foundation called The Children's Investment Fund Foundation (CIFF), run by Hohn's wife, Jamie Cooper-Hohn, and which has become one of Great Britain's largest charities.

Like most hedge funds, TCI requires investors to commit their capital for multi-year periods. This long-term horizon allows the fund greater flexibility when trading and investing capital independent of any potential ad-hoc time constraints.

Investor activism

TCI has a reputation for aggressive shareholder activism.^[1] It has taken an active role in most situations to promote its own agenda under the guise of sound corporate governance and increase shareholder value. TCI has been a major shareholder of the German stock exchange Deutsche Börse where it forced the resignation of the CEO after he refused to abandon his plan to take over the London Stock Exchange. In 2007, after acquiring 1% of the shares of major Dutch bank ABN AMRO, TCI led an attack demanding the bank split up or sell to the highest bidder to produce shareholder value.^[2]. In June 2007, TCI failed in its attempt to get the Japanese utility J-Power, in which it had acquired a 10% stake, to boost its dividend. The general meeting of shareholders rejected the proposal, prompting a severe selloff in the stock.

In 2006, as a shareholder of both Mittal Steel Company and Arcelor, TCI supported Mittal Steel in the company's unsolicited takeover offer for Arcelor. However, when Mittal Steel subsequently attempted to acquire Arcelor Brasil (one of Arcelor's subsidiaries) without an appropriate premium, TCI defended the rights of Arcelor Brasil’s minority shareholders, causing Mittal to raise its offer price more than 55%.