Activist hedge fund CIAM takes aim at Belgium’s Ontex Group

Catherine Berjal and Anne-Sophie d’Andlau

CIAM, the London and Paris-based activist hedge fund, has hit out at Ontex Group NV over what it sees as financial underperformance and a lack of strategic direction, and is calling for a shake-up of the Belgian personal hygiene products manufacturer’s board.

CIAM, which was co-founded by Catherine Berjal and Anne-Sophie d’Andlau (pictured) in 2010, currently holds a 3.65 per cent stake in Ontex.

CIAM believes there is "little to suggest" that Ontex is serious about regaining investor confidence and generating value.  The Aalst, Belgium-headquartered group specialises in a range of baby, feminine and adult personal hygiene products.

Ontex’s share price is down 35 per cent year-to-date, and close to an all-time low at EUR12, CIAM observed. The Euronext Brussels-listed firm is underperforming both the BEL20 by 22 per cent and its key competitor Essity by some 33 per cent, according to the activist hedge fund manager.

CIAM’s investment strategy involves taking global equity positions in companies based on a range of corporate events, focusing on special situations and merger arbitrage, to generate returns and unlock shareholder value.

In a letter to Ontex chiefs this week, the activist manager pointed to analyst research highlighting investor frustrations over poor execution, thin disclosures, and operational missteps, and a lack of a value creation plan.

It said its market value has continued to slide despite the appointment of a new chairman, Hans van Bylen, in May this year.

“We are concerned that management will hide behind exogenous factors such as a favourable raw material pricing environment to overplay profitability and EBITDA growth while ignoring the fact that business fundamentals remain poor,” CIAM said, and called for improved transparency on key revenue and earnings drivers.

“Management needs to step up on the 30 July H1 2020 results presentation and detail a clear path to near and long-term value creation,” the letter continued. “If management cannot do so, the board must hold them accountable and take action.”

CIAM also expressed doubts over the current board’s requisite experience in ensuring management direction and oversight, and suggested the addition of experienced non-executive directors.

Earlier this year, CIAM targeted French reinsurer SCOR over “significant corporate governance deficiencies”, and in 2017 it launched a campaign against Walt Disney over plans to delist its Paris-based theme park operator Euro Disney.

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