London becomes activist capital of Europe as investors pressure firms over AI plans
London has become the shareholder activist capital of Europe as boardrooms feel the heat of interventions from outspoken investors.
The UK’s capital markets were the subject of a staggering 57 per cent of all European campaign activity in the first half of the year, fresh data has found, crossing the 50 per cent threshold for the first time in years.
The figure represents a rise of 46 per cent compared to last year and is more than triple that of Italy and Germany, the second and third largest countries for shareholders activism, according to data compiled by financial advisory firm Lazard.
Given the comparatively low valuation multiples of London-listed firms compared to their peers, it is no surprise value-hunters are casting a covetous eye at the UK equity market, according to Russ Mould, investment director at AJ Bell.
“Activists tend to be investors who seek out value and then try to ensure that a catalyst arrives to unlock that value, rather than simply waiting for it to happen. In this context, the UK could be fertile territory,” Mould said.
“Activists often like to see themselves as suggestivists who offer constructive insights behind the scenes into how a firm may be better run and a share price galvanised. They only tend to get confrontational and run public campaigns if they feel they are being ignored or given unduly short shrift.
“Activists tend to look for certain things in their quest for value creation, and any board which has not sat down, looked at the company for which it is responsible and pondered what an activist might suggest if they turned up has nodded off on the job.”
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Almost half the shareholder activism in Europe in the first six months of the year related to a push for firms to break up or explore a sale, Lazard data found, while calls for share buybacks accounted for around a third of campaigns.
Only four per cent of campaigns related to strategy or operational demands, a sharp drop compared to last year, while 13 per cent focused on ousting or introducing board members.
Among the top areas of focus for investors was AI, with shareholders interrogating how companies are adopting the technology and how they avoid losing business to it.
“As AI continues to reshape industries, activists have begun to exert pressure on companies to adopt and implement AI-focused strategies to unlock value for shareholders,” Lazard said.
Around two in five campaigns were aimed at companies worth $5bn-20bn, despite this cohort accounting for only a fifth of the market, while one in ten were aimed at mega-caps, defined as being worth $50bn or more, despite this group representing only five per cent of businesses.