UK companies beware: activist investors may be coming for you.
New global research out today has identified the UK as one of the most at-risk countries for shareholder activism.
Outside of the US, the dominant market for activism, an FTI Consulting activism tracker found 342 global campaigns last year, compared with 70 in 2010.
The UK, Canada and Australia have been judged to be vulnerable because of the strong US dollar, undervalued asset prices and “increased global scrutiny of corporate governance standards”.
In the UK, where the average ownership of shares by company insiders is around 1.9 per cent, according to FTI, the activist campaign threat level is judged to be nine out of 10.
The study tracked 51 UK campaigns last year, up from 28 in each of the preceding years and the highest level on record.
FTI’s Ed Bridges said:
The value of the pound and continued uncertainty after Brexit has opened up opportunities for activists to target vulnerable companies.
The fact that two thirds of FTSE 350 companies are seeking renewal of their binding remuneration polices in 2017 could result in certain levels of dissent – and indicate an investor base open to dialogue with potential activists.
Recent UK activist action tracked includes Crown Ocean Capital’s battle for control of Edinburgh oil explorer Bowleven and Teleios Capital Partners’ campaign on industrial giant Fenner.
FTI noted that South Korea and Japan “felt the effect of governance changes and increasingly shareholder friendly sentiment in 2016 with landmark shareholder activism campaigns. Investors likely will continue to exert their influence in this region as they become more comfortable with this environment.”
Steven Balet, a managing director and head of corporate governance and activist engagement at FTI, said: “The success of shareholder activism in North America continues to fuel its spread across the globe.”
He added: “These global shareholder activists are not necessarily U.S.-based nor do they necessarily conduct their activism in the US style. They have, however, been increasingly successful in many jurisdictions across Europe, the UK and Asia.”
The FTI global activism map can be viewed here.