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01 March 2024

RAB shares plunge on N.Rock nationalisation

By Agencies


Shares in hedge fund RAB Capital, one of Northern Rock's biggest shareholders, plunged almost 10 per cent in early Monday trading, following Britain's decision to nationalise the ailing mortgage bank.

An independent audit is set to calculate how much the government will pay shareholders to take the lender into public ownership, but many investors fear they will get nothing.

RAB has a stake of about 8.2 per cent in Northern Rock, making it the largest investor in the bank after SRM, another hedge fund that has built a sizeable stake since Northern Rock's near-collapse in September.

At 4:08 a.m. EST, RAB shares were down 6.1 per cent at $1.27, valuing the hedge fund at around $652 million.

Northern Rock shares, held in RAB's special situations fund, account for 2 per cent of its total funds under management.

"The Northern Rock development is not good news for RAB. It has a holding it can't sell ... all the money has just been dumped," one trader said. "The shares had already been coming down from 120 pence. Maybe its strategy is not quite right for the market at the moment."

SRM founder Jon Wood has told British newspapers his fund could consider legal action to secure value for shareholders. (Reuters)