The shareholder activist arena has traditionally been within the U.S. capital markets, where a history of public and high-profile activist campaigns has resulted in the establishment of well-known activist players and has led to the rise of proxy advisors and solicitors. Canada has witnessed both U.S. and domestic players becoming increasingly involved in activist campaigns within Canadian capital markets. In this context, the “rise of shareholder activism” has been a relatively North American phenomenon.
As noted in a recent article published by the International Financial Law Review (April 9, 2014) the “rise of shareholder activism” is becoming more prevalent in Europe, with research showing activist activity on the continent increasing threefold from 2010 to 2012. While European activism has been most prominent in the United Kingdom, the increase has been attributed to the weakness of the European capital markets generally and the poor financial performance of strategic European institutions.
Other factors responsible for the increase activist sentiment may be a growing shareholder base in Europe comprised of opportunity‑seeking U.S.-based activists and institutional investors. Such investors however may face structural challenges in pursuing an activist agenda as a result of differing regulatory frameworks across multiple European jurisdictions. However, it appears that European investors, inspired by the successes of activist campaigns from across the Atlantic, are also leveraging their knowledge of the European regulatory framework in seeking desired changes. The spread of shareholder activism may not be limited to Europe however. Recently a U.S.-based hedge fund has sought to shake up a Chilean bank through a shareholder campaign in which it holds a minority investment.
Differences in legal and regional landscapes generally brings both increased risk and opportunity to both strategic investors and the companies they invest in. Cross‑border investment activity may result in the intersection of different investing strategies and expectations. In this climate of rising shareholder activism, investors and companies alike should be aware of global developments and issues in the activist space.