Exclusive-Five9 nears settlement with Anson Funds under activist pressure

By Svea Herbst-Bayliss

NEW YORK (Reuters) – Five9 (NASDAQ:) is nearing a settlement with Anson Funds Management after the hedge fund and several other activist investors pushed the U.S. call center software company to make changes that would boost its share price, sources familiar with the matter said on Sunday.

Anson Funds’ portfolio manager Sagar Gupta would receive a board seat under the terms that are being discussed, said the people who requested anonymity because the negotiations are private. The board has nine members.

An agreement could be announced as early as Monday, but the situation remains fluid, the sources said.

Representatives for Five9 and Anson Funds declined to comment.

Reuters first reported in July that Anson had amassed a stake in Five9 and was engaging with the company. In October Reuters reported that Legion Partners had also built a stake in the company and asked for a board seat, making it the second activist investor to pressure the company.

Investment firm Scaler Gauge, run by Sumit Gautam, has also engaged with the company in recent months and supports Gupta’s addition to the board, one of the sources said.

Five9’s market value has fallen to about $3.2 billion after its stock tumbled 44% so far this year. In the last month the stock price has climbed 15%.

In November the company posted stronger third-quarter revenue and a smaller net loss than in the year-ago period.

Five9 last year turned down an acquisition offer from Zoom Video Communications (NASDAQ:), the maker of the popular virtual meeting software, one of the sources said.

Anson, which is run by chief investment officer Moez Kassam and oversees roughly $2 billion in assets, hired Gupta last year from activist investment firm Legion as it works to build out its shareholder activism and engagement strategy. In the first half of the year, the Anson Investments Master Fund LP gained 10.6% after returning 18.2% in 2023, according to an investor update.

Gupta spearheaded Legion’s investments in technology, media and telecommunications and joined Anson in October 2023.