One of Britain’s biggest listed property groups is facing demands from an American hedge fund to break itself up and hand over a board seat in the latest example of shareholder activism targeting a major UK company.
Sky News has learnt that Countryside Properties, which has a market capitalisation of over £2bn, has been told by Browning West to sell its housebuilding arm – one of its two main operating divisions.
Browning West has also written to Countryside to request a board seat, according to insiders.
The hedge fund’s request was made several weeks ago, and is expected to be followed by further dialogue before the end of the year, they added.
News of Browning West’s demands comes less than two months after it took a 5% stake in Countryside.
It has since increased its shareholding to 8%.
It emerged in September that Countryside was one of four housebuilders facing enforcement action from the competition watchdog for ripping off leaseholders by charging them excessive ground rent payments.
The company’s housebuilding operations account for roughly 40% of total group revenues, with Countryside’s faster-growing partnerships business – which works with local authorities and housing associations to provide affordable and private rented sector homes – making up the majority of its sales.
In July, it raised £250m from a share placing, making it one of hundreds of listed companies to tap investors for new capital during the coronavirus pandemic.
It said at the time that it wanted to grow operating profit from its partnerships business to 75% of group operating profit, but has shown no sign of wanting to dispose of a housebuilding arm which is one of the largest in southeast England.
Browning West’s push for a break-up will put pressure on David Howell, the former travel industry executive who chairs Countryside, to marshal a robust defence of the company’s strategy.
The hedge fund has been a vocal investor in Domino’s Pizza Group, where its founder, Usman Nabi, now holds a board seat.
A Countryside spokesperson said: “We have engaged in extensive private dialogue with Browning West as we do with all of our shareholders.
“We have a clear strategy to accelerate the growth of our Partnerships division which we are focused on executing.
“It is the job of Countryside’s Board and management team to do what is best for the Company and to create value for all shareholders.
“Browning West has raised matters which the board and management have previously considered and we will continue to engage with Browning West and our other investors in that context.”
A source close to Countryside said its shares had risen by almost 85% since its flotation in February 2016.
Browning West declined to comment.
A number of prominent London-listed companies have been targeted in recent months by activist investors, the latest example of which was St James’s Place, the wealth manager.
Others which remain in activists’ cross-hairs include Barclays and Pearson.