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• The Children's Investment Fund, the UK-based hedge fund, has threatened legal action against Coal India, the state-backed energy company, in a rare sign of shareholder activism in India that could further hamper the government's faltering divestment programme.TCI, the biggest foreign investor in Coal India, accused the world's largest coal producer of being "reckless and lacking integrity" in its attitudes to minority investors.In a letter sent to all Coal India board members on March 12, TCI attacked the company and its board for "not acting independently of India's government". It also accused the company of "acquiescence to interference by the Prime Minister's Office" on coal prices and a range of other issues. TCI threatened unspecified legal action against board members.

• The $8bn fund does not disclose the exact size of its investments, but is understood to own close to two per cent of Coal India.Oscar Veldhuijzen, a partner at TCI, told the Financial Times: "Coal India have to understand that if they mess around and treat their company like a 100 per cent government-owned entity, it will have major implications for the future of Indian capital markets."TCI acquired its stake during Coal India's $3.5bn IPO in 2010, India's biggest initial public offering to date, when 10 per cent of the company was sold to private investors. The hedge fund has since lobbied the company to raise prices and introduce other changes in operations and management. India suffers shortages of coal and is the among the top three importers of the fuel.

• Coal India introduced a new mechanism to sell coal, which increased prices, at the start of 2012. But it reversed that decision in late January – less than a week after a senior government administrator, coal secretary Alok Perti, wrote to the company to tell it to reverse a recent price increase.The administrator's letter, dated January 25, was obtained by TCI using India's right to information legislation. Coal India declined to comment."We believe they are destroying value. When you list a company you can't treat it like it is a government body," Mr Veldhuijzen said. "If the government abuses Coal India this will also have big implications for future IPOs and divestments."

• India set a target for $8bn in state asset sales by March 2012 to help close a worsening fiscal deficit, but has to date achieved less than half of this amount. It has plans for further divestments in the coming year.Earlier this month the sale of a $2.45bn stake in state-run Oil and Natural Gas Corporation had to be rescued by a last-minute intervention from state-owned Life Insurance Corporation of India.TCI has a history of running high-profile shareholders' campaigns, including those which undermined the potential merger of Deutsche Börse and the London Stock Exchange in 2005, and began the sale of ABN Amro to Royal Bank of Scotland in 2007.

• Its intervention at Coal India was welcomed as a rare case of an investor airing grievances in public."India's investing institutions are often either controlled by the government or keen to avoid recrimination from the government, so they do not speak out," said Pradip Shah, chairman of IndAsia Fund Advisers, a Mumbai-based advisory firm. "So some kind of action of this sort is long overdue and very welcome. The government now cannot ignore this type of activism if it wants to keep its divestment programme on track."The hedge fund, run by chief executive Chris Hohn, who donates nearly all of the fund's profits to a charitable foundation helping impoverished children, has also recently taken its activist model to Asia, running a campaign surrounding an investment in Japan Tobacco.

• The Coal India move is the latest indication that TCI – which was notorious for picking bold, sometimes aggressive boardroom showdowns – is moving back towards the style of investing for which it is most known.Mr Hohn had appeared to take a step back from TCI's adversarial approach following steep losses for the fund in 2008. In his first interview since the financial crisis, Mr Hohn told the FT last month that TCI was now seeking to get involved in companies with poor corporate governance that might make other investors "nauseous".

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