Activist fund dives into NBN Service Stream Illustration: Kerrie Leishman. The new star-studded activist fund backed and headed by billionaire Alex Waislitz has earmarked the beleaguered NBN contractor Service Stream as its first investment after assessing a number of potential recapitalisation candidates. It is a business Waislitz knows well - his private investment company, the $1 billion Thorney Investment Group, holds 19 per cent of the telecommunications contractor. The decision to invest in a company he knows well and has taken a few financial hits from in the past year suggests he believes it has turned the corner, given his reputation will be on the line to make sure his first deal in his listed vehicle is a good deal. He is in good company. The board of the listed fund includes Crown director and Ellerston Capital chairman Ashok Jacob, well regarded company director Gary Weiss and Arnold Bloch Leibler managing partner Henry Lanzer. Their Thorney Opportunities Fund - which is listed on the ASX and after being spawned out of a backdoor listing of a cashbox Wentworth Holdings - will emerge with a substantial stake in Service Stream, which went into a trading halt on Thursday. Service Stream will raise $21 million through a 15 per cent placement, or 42.5 million shares, priced at 22¢ a share and a 2-for-11 non-renounceable rights issue at 18¢ a share. The activist fund will take up 80 per cent of the placement and Thorney Investment Group will take up its rights. The public and private funds will emerge with almost 30 per cent of the company. The equity issue will be underwritten by Wilson HTM. Waislitz, who is married to Heloise Pratt, the daughter of the late Richard Pratt, put the activist fund together in November following a $50 million recapitalisation of Wentworth Holdings. Wentworth raised $40 million from sophisticated investors, including $15 million from Thorney and another $12 million in a retail offer in December, attracting some of the country's richest and most powerful people. With this in mind he will want to make sure he can live up to his reputation as being one of the country's top stock pickers. He told Fairfax Media last year: "We are constantly looking for opportunities, some of which will be suitable for this vehicle. We don't feel the need to rush and do five deals in the first week of operation. But what you will see is us making about three to five investments per year. And I would be surprised ... if we had not done our first deal within the first six months. In other media interviews he said the new activist group would "have the necessary support to be a driver of strategic change in big companies by teaming with existing institutional investors who have previously been fearful of 'being punished' for speaking out against management or boards." He has also been reported as saying that there was "significant" interest from institutional investors to back an activist group that was willing to "engage in constructive dialogue with management and the board about strategic change at some companies." His point was that a lot of board members sit on more than one board and this makes some institutional investors gun shy about being too vocal for fear of being punished. They say to us, if you are at the front line, here is our proxy and we will support you. So that is pretty encouraging for us. It will be interesting to see the fund's plans for Service Stream, particularly given the controversy that dogged the company in the past year, including the resignation of its chief executive, a massive $107 million loss, an extended period of voluntary suspension from the ASX and write-downs. Not surprisingly its shares fell from 40¢ a year ago to 19¢ before it went into a trading halt. But as Hugh Robertson, of Wilson HTM, said: "Alex is good at sensing the opportunity when things are at the bottom." The activist fund comes at an interesting time in Australia with a number of similar funds emerging. Fairfax Media columnist Michael West wrote last year: "Alex Waislitz's $50 million Thorney Investments; Sir Ron Brierley's Mercantile Investments; and Gabriel Radzyminski's $100 million Sandon Capital are a few of the new kids on the block. The likes of Geoff Wilson's WAM (which is fighting Australian Infrastructure Fund), Gary Weiss' Ariadne (versus Hillgrove) and Gavin Solomon's Metals Finance (against Bass Metals) were already in the space. As were a swath of smaller dissident groups shaping up to the likes of Midas Resources and Galilee Energy. There is little doubt that activism is on the rise and as more self-managed super funds sprout up, more investors will want funds to start using their voice. Over the years there have been a few individuals who have used their voice to call for change, but it has been far too little.