While activist investors are known for their interest in underperforming businesses, there is one sector in the UK so troubled that even opportunistic shareholders are now turning their backs: high street retailers.
Such are the difficulties facing Britain’s bricks-and-mortar retail giants that many have become "too distressed to attract activist interest", according to a new report released today.
Despite a falling pound and shareholder-friendly laws making the UK "the single largest hunting ground for activists", the report has found that the number of listed consumer companies being targeted has dropped from 43 in November to 35.
Alvarez & Marsal (A&M), the consultancy firm that produced the findings, said that some firms in the consumer sector, especially offline retailers, are "performing so poorly in the face of extremely tough market conditions that they are no longer of interest to activists".
Activist investors typically target embattled companies in a bid to extract more value by forcing change to a firm’s board.
However, their general shift away from offline retailers underlines just how severe the industry’s troubles now are, with increased competition and higher costs causing a record number of net closures on Britain’s high streets and the demise of major chains such as Debenhams.
Earlier this month a report from PwC and the Local Data Company showed a historic low number of store openings on the high street last year, with some 2,481 outlets vanishing.
Today’s report from A&M also found that despite the UK’s status as the top spot for activists, its share of activist targets in Europe has fallen as opportunists ramp up their boardroom pressure on listed companies across the continent more widely.
"Early signs show that they are successfully honing their tactics to better suit European markets – often taking a less confrontational approach than traditional US campaigns," according to the report.