Investor Activism Boom in the UK

Although not a new concept, shareholder activism has been prominent in the news - and likely in UK Boardrooms – in recent weeks and months. A combination of factors, including Brexit, the pandemic and robust corporate governance, have seen activist investors migrate from a saturated US market to Europe and the UK particularly, with the depressed price of UK PLCs proving to be a big draw.

With at least 9 FTSE-100 organisations currently having activist investors on their shareholder register, it is large cap and underperforming companies that have different business lines and geographies that tend to be targeted as they present an opportunity to divide assets and businesses in order to improve performance. Aside from strategic value creation, the social and environment performance and shareholder discontent seem to attract and drive campaigns by these investors.

Many institutional investors and shareholders are supportive of activists as they recognize the benefits that can be derived from these campaigns in the form of increased profits. However, the pressure might not be as welcome by the targeted companies’ management and Boards, whose leadership oftentimes comes into question.

Company Secretaries and Governance professionals may be able to support their Directors and Executive teams by proactively adopting an activist perspective while carrying out self-assessments of their organisations, and not diminishing the importance of disappointing profits, weak stocks and discontent from shareholders. Instead, they can encourage objective analyses and the proactive implementation of any changes necessary in order to avoid contests by these investors and potentially loss of control. 

We would love to hear thoughts and experiences on this from our network. Feel free to get in touch with us on team@core-partnership.co.uk

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