Activist investor campaigns hit record high, driven by Japan
NEW campaigns by shareholder activists reached record levels globally in the first six months of the year, data from Lazard showed.
The number of new activists campaigns totalled 147, up 7 per cent from 138 in the same period in 2023 and 29 per cent above the five-year average, Lazard said in a report.
The pickup in activity was largely concentrated in the Asia-Pacific region, while North America and Europe were near last year’s pace. New campaigns in Apac jumped 65 per cent – to 43 from 25, with Japan accounting for 28 of those.
Recent campaigns include Elliott Investment Management building sizeable stakes in Sumitomo and SoftBank Group, and Oasis Capital last week calling for a governance overhaul at Japanese drugstore chain Ain Holdings.
“Increased Japan activity suggests governance reforms in the country have been effective, increasing the market’s attractiveness for both international and local activists,” Barclays said in its parallel review of the first half that reached similar conclusions.
Tech, real estate
In the US, 62 campaigns were launched, an increase from 56 last year, according to Lazard. Technology companies were frequent targets, representing 26 per cent of the campaigns. Hardware and software companies including Dye & Durham, Match Group, Pitney Bowes and Twilio were targeted simultaneously by two activists.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Real estate emerged as another area of heightened activism, reflecting an “unusually active” period for sector specialist Land & Buildings Investment Management, which has launched five campaigns this year. Activism in the financial services sector was muted, with no new campaigns.
The “swarming” phenomenon, in which two or more activists pursue the same target, has become a consistent feature of campaigns in Europe, Lazard said.
“Swarming in Europe appears related to the rise of first-time activists and activity from long-only institutions,” Lazard said in its report. “These types of investors may be more inclined to partner with other activists to pool their influence.”
Globally, the first-timers, which can range from generalists exploring activist tactics to new funds spun off from established platforms, represented 46 per cent of activists waging campaigns and 34 per cent of the new campaigns.
Settling, not fighting
Lazard’s data suggested that activists and their targets are increasingly opting for private negotiations to avoid proxy battles, a trend the bank tied to the “threat” of the universal proxy card (UPC). The US Securities and Exchange Commission in 2022 began imposing requirements for UPCs, which place a company’s nominees and those put forth by activists on the same ballot, allowing shareholders to pick and choose from competing slates.
Lazard found that 39 per cent of seats won in a settlement were announced within a week of a public campaign starting, up from the 26 per cent five-year average before the UPC was introduced. Only 32 per cent of boards at targeted companies wound up in fights lasting longer than 90 days, below the historical average of 44 per cent.
In a third report on activist investors, Freshfields determined that 39 of 42 board seats won by activists this year as at June 14 came via settlements rather than shareholder votes.
Copyright SPH Media. All rights reserved.
