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Daniel Loeb’s Third Point makes $300m profit from Rivian IPO

Daniel Loeb’s Third Point has made a profit of about $300m on its stake in Rivian, one of several hedge funds to make large gains from the electric vehicle maker’s turbocharged flotation this month.

Billionaire investor Loeb made the gains through a series of investments over the past year including in its convertible notes, according to investor letters and a person with knowledge of the trade.

Rivian, which makes pick-ups and vans and is backed by Amazon and Ford, soared on its market debut this month, giving it a value greater than both Ford and General Motors, even though it is yet to record any meaningful revenue.

Shares surged from their offer price of $78 to more than $170 last week, although they have since fallen back to $118, knocked in part by news that Ford had scrapped plans to create an electric vehicle using technology developed by Rivian.

Among other funds to have profited on Rivian are Daniel Sundheim’s D1 Capital and Philippe Laffont’s Coatue Management, which both invested during a $2.5bn funding round this summer, as well as London-based Infinity Investment Partners.

Third Point, D1, Coatue and Infinity declined to comment.

Loeb, whose total gain on Rivian has not previously been reported, wrote in a recent investor letter that Third Point had met founder and chief executive RJ Scaringe early last year and was “deeply impressed by his charismatic vision and approach to designing a new type of automotive company”.

Loeb also pointed to the backing of Amazon, which has ordered 100,000 commercial delivery vehicles from Rivian. “As Amazon seeks to become a dominant player in logistics while being carbon neutral, we believe that Rivian will be their end-to-end fleet provider of choice,” he wrote.

Third Point, which has $20bn in assets under management, this summer invested $167m in the company’s convertible notes, which were switched into shares at the time of the initial public offering, as well as two more investments, including around the time of the IPO.

Third Point wrote to investors on November 10, the day of the flotation, to say it had made a 640 per cent gross internal rate of return, an annual measure of performance favoured by the private equity industry.

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Mayfair-based Infinity Investment Partners, meanwhile, first invested in Rivian in January and has made a gain on its initial position of more than three times, according to a letter sent to investors last week. That equated to gains in the tens of millions of dollars, according to a person familiar with the position.

“Rivian is in a unique position to become the key player in the automotive industry on both the passenger and commercial side”, Infinity wrote in its letter.

Loeb’s $300m profit is the latest in a series of large gains he has made from privately held firms that have come to market.

His fund’s biggest winning position this year, responsible for about a quarter of gross profits, has been Upstart Holdings, an artificial intelligence lending platform that floated at the end of last year and which is up 400 per cent this year. Its second-biggest winner is cyber security firm SentinelOne, whose IPO was this summer.

In the first 10 months of this year Third Point is up 35.7 per cent, its best year of returns in more than a decade.

laurence.fletcher@ft.com

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