Activist hedge fund Starboard Value LP has built a 5% holding in Algonquin Power & Utilities Corp because it believes shares of the business are "undervalued" and represent an "attractive investment opportunity", according to a report by Reuters.

The report cites a regulatory filing made in Friday as confirming Starboard's stake in the company, which owns and operates regulated utilities, as well as power generating and water assets, across Canada and the United States. According to Algonquin's website, the company's regulated business serves more than one million customers.

In May, Algonquin, which has sizeable debt pile of around $7.5 billion following a series of acquisitions in recent years, initiated a strategic review of its renewable energy group, following a push by Corvex Management and other activist firms for changes.