Is it just coincidence that the rise of US activist involvement in UK companies is happening at the same time as rising anger among long-term shareholders? David Rowley investigates.
“These issues go beyond Sports Direct specifically: they relate to the integrity of the UK stock market and the behaviours we expect of all companies to which we provide the capital of our beneficiaries.”
Chris Hitchen, RPMI Railpen
The UK is heading for a record year in the number of activist campaigns undertaken against listed companies. At the time of writing 31 companies had been targeted by investors. According to the information service ActivistInsight the indications are that this figure will rise to over 37, the record set in 2012. The main reasons are a weak pound that is making UK companies more attractive to US activists, but also a growing willingness for long-term shareholders to assert themselves.
It is US activists who carry the reputation for making brash and aggressive public pronouncements about the companies they target, but the comments from long-term UK shareholders about Sports Direct run them close.
Speaking in September, Euan Stirling, head of stewardship and ESG investment at Standard Life Investments, said (as a 5.8% owner of Sports Direct International): “We have engaged with senior executives and non-executives over many years, sadly to little effect. The responses to our enquiries have been either unconvincing or non-existent.”
Standard Life Investments, like other investors, had called for chairman Keith Hellawell and for the company’s non-executive directors to be sacked.
Chris Hitchen, chief executive of RPMI Railpen, made similar comments about how board members at Sports Direct had ignored shareholder concerns, but also added a veiled threat to the boards of other UK companies that failed to listen.
“These issues go beyond Sports Direct specifically: they relate to the integrity of the UK stock market and the behaviours we expect of all companies to which we provide the capital of our beneficiaries,” said Hitchen.
