Many chairs of public companies in the UK believe they would be “better off” at private firms given the regulatory burdens and intense scrutiny faced by listed businesses, according to a major investor group.
The Investor Forum, whose 50 members control £18.5 trillion assets, said the continued rush of private money into the unlisted market coupled with “the constraints…the public markets impose” was making running a listed company less appealing.
In its annual report, published today, the group called for investors and companies to “make the positive case for public markets”, as British equity markets face up to challenges including falling number of listings, which sank to a 10-year low in 2019.
Listed companies are also facing increased investor scrutiny on issues such as high executive pay, board diversity, and climate change.
The report said that stewardship “remains the number one issue that frustrates chairs”.
“It is crucial that investors find the right balance between stewardship activity which effectively ‘holds companies to account’ and any perception of a prescriptive application of proxy guidelines,” it added.
“There is no doubt that the effectiveness of public markets is being questioned,” it said. Members of the Investor Forum, which include Blackrock, Fidelity, and M&G, collectively own over 33 per cent of the FTSE All Share.
The organisation said it had targeted nine companies during 2019, including Vodafone, First Group, and Inmarsat.
The group acted against Imperial Brands in June after shareholders became frustrated with its poor performance and failure to appoint a new chair. Chief executive Alison Cooper stepped down in October and a new chair was appointed.
“There is an inescapable sense that the business agenda has changed and that there is a vital need for investors to respond,” said the investor group.
“Society and regulators are asking questions, many of which call for urgent responses and radical changes in approach.”