Editorial: The activists are a welcome sign of faith in the City’s future
The City is not always portrayed well in the wider media, but a certain kind of Square Mile institution was rather effectively deployed at the beginning of Monty Python’s The Meaning of Life. The Crimson Permanent Assurance, a “once proud family firm fallen on hard times,” fights back against its new ownership by the Very Big Corporation of America.
Eventually, this old City outfit fights back – casting off the Square Mile for the high seas. The triumph of the Home Counties-dwelling accountants over the Wall Street corporate titans is extremely satisfying. Indeed, for all our friendships and partnerships, the battle for supremacy with the US remains a real one.
In that context, activist investors have perhaps always felt a little more Wall Street than they have the Square Mile – until now, that is. T
his year seems set to be their year, with many of them lining up (or rumoured to be doing so) FTSE-100 giants. The City should welcome this new-found scrutiny, unsurprising as it is. London-listed firms are undervalued on a global scale, for reasons both fair and otherwise. It is not a surprise that activists look on them as juicy targets.
Some are more obvious than others. Trian Partners’ stake in the increasingly error-prone Unilever may be just what the firm, and embattled chief executive Alan Jope, needs. Elliot’s dogged pestering of GSK has forced Dame Emma Walmsley to come out fighting, too. Cevian’s assault on Aviva boss Amanda Blanc is less obvious, bearing in mind she seems to have already been delivering on her plan to ditch distracting international divisions. But having somebody mark the homework is always a worthwhile exercise.
Fundamentally, activists want to create value, doing what they can to improve both company performance and share prices. Activists thinking in the long-term can hold businesses to account and they certainly prevent drift in either leadership or strategy. In our post-Brexit world, in which London-listed firms will need to be nimbler and sharper, their attention should be seen as a sign of faith in the capital’s future.
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