Financial Times- UK companies are the most likely target for hedge fund activism in Europe, according to research published this week.
The finding, based on a survey by Thomson Financial of 30 activist situations that have entered the public domain in the past four years, will reinforce the perception that hedge funds feel they can make more progress agitating companies on the UK stock market than those listed elsewhere.
It comes a month after some UK institutional investors lobbied Germany not to make it harder for them to work together against poor-performing companies without being deemed to be a concert party.UK companies were targeted in 23 per cent of activist situations, followed by French companies, at 20 per cent. By sector, financial services was the most frequent subject of activism.
Thomson said most hedge fund activists started out with stakes of only about 1 per cent in their targets. The most common request was for board representation, followed by pressure for the company to spin off assets.The overall success rate of hedge fund activists was 63 per cent, when judged in terms of achieving influence on corporate strategy.
Thomson said it was hard to gain a clear picture of hedge fund activism in Europe since there was far less transparency in the region than in the US, where activists must reveal both their identity and the purpose behind their investment in 13D filings with the Securities and Exchange Commission.
Hedge fund activism has come under increasing scrutiny in Europe in recent years and especially since The Children’s Investment Fund torpedoed plans by Germany’s Deutsche Brse to buy its UK counterpart, the London Stock Exchange, in 2005. TCI also set in motion events that led to the break-up of ABN Amro after the London-based fund built a stake in the Dutch lender this year and called for an end to its acquisitive strategy.
