Asia and the Era of Activism Part 1: Activism Trends, the Identification of Targets & Returns

Summary:

The history of tracking public activism in Asia and the Pacific region has until the last 5-10 years been embryonic in stature. This was mainly due to the limited public profile of the active participants in the region. As participants have become more vocal, so have their profiles and tactics within the campaigns more evident. We expect the number of public campaigns in the Asia Pacific Region to grow faster than the 6% CAGR seen globally between 2013 and 2019 and closer to the 10% the region posted over the same period. Furthermore, we expect them to have a greater impact on the share prices of the targeted companies.

This review highlights why understanding and appreciating the new rules governing shareholder activism is key to portfolio managers as well as Company Boards and Executives. Specifically, we point to why a successful campaign has the potential to deliver outperformance of over 20% against that of the index. Moreover, when there is a 58% probability of an activist achieving a board seat, (up on 48% 3 years ago), corporates and investors need to be well aware and prepared to accommodate a new breed of shareholder.

Specific to this report is the identification of the various types of activists, their campaigns, potential targets and the probability of their success, as well as how corporates may behave given the new post Covid conditions.

In part of two (2021 Activist Outlook and How to Optimize Returns) of this three part series on activism, we lay out the roadmap for the activist in 2021, and the leverage possibilities of numerous opportunities that have arisen as a result of COVID-19.

In part three (Corporate Readiness for Activism), we consider defence strategies available to corporates and what the investor should be prepared to see in any response.