World's top activist fund sets eyes on one of Singapore's banks

[SINGAPORE] The world's best-performing activist fund returned 103 per cent in seven months by targeting mainly smaller Asian companies in industries from commodities to engineering and food.

Now, it's getting ready to take on one of Singapore's banks, according to Judah Value Activist Fund's July newsletter obtained by Bloomberg.

"We are building a bigger position in this bank before we craft an open shareholder letter with proposals to improve operational efficiency that will unlock and increase value in the company," the newsletter said. It didn't name the lender.

The US$44 million Judah Value Fund, based in Singapore, likes to work behind-the-scenes and will only engage with firms that are receptive to "positive activism", according to manager Roland Thng, a former OCBC Bank trader. The holding that powered this year's returns was Hong Kong-listed coal miner Agritrade Resources Ltd, which climbed 116 per cent over the period.

While Asian companies have been the targets of high-profile campaigns by the likes of US billionaire Paul Elliott Singer, activist investors born and bred in the region are relatively few. In Singapore, such firms include Quarz Capital Management Ltd and Metrica Partners Pte.

The city-state's three main lenders are DBS Group Holdings Ltd, OCBC and United Overseas Bank Ltd. The FTSE Straits Times Financials Index has slipped 3.7 per cent since January versus a 5.2 per cent decline in the benchmark Straits Times Index.

In other investments, Judah plans to bulk up in Singapore-listed Ramba Energy Ltd via a private placement that will be accompanied by a five-year call warrant for more shares, according to the newsletter. Ramba, which produces oil and gas in Indonesia, has a market value of about US$31 million after slumping from a 2013 peak.

Judah will take an initial 5.8 per cent stake in Ramba while the warrants will hand it another close to 10 per cent of the company's shares.

"The company is grossly undervalued with a highly valuable logistics arm and an energy arm that can be turned around," Thng said. "Also, I will have a board seat at the completion of the deal, giving my fund more control in the company's operations."

Judah Value's seven holdings include companies in engineering, food, ports and television rights. Eurekahedge Pte described the gains this year as world-beating among activist funds.

BLOOMBERG