Who's next? Asia investor activism set to grow after BlackRock public campaign

Tue Mar 8, 2016 4:30am EST
 
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By Michelle Price and Elzio Barreto

HONG KONG (Reuters) - Following a rare public campaign, BlackRock Inc (BLK.N: Quote) voted against a deal planned by a Hong Kong firm that the world's biggest asset manager partly owns, revving up investor activism in Asia after it roared ahead in 2015.

In a ballot on Tuesday, BlackRock rejected G-Resources Group Ltd's 1051.HK plan to sell its main asset, an Indonesian gold mine, saying it didn't have confidence G-Resources would use the proceeds in investors' best interests. Owning 8 percent of G-Resources, BlackRock urged other shareholders to follow suit.

G-Resources, which has said it would use the proceeds to shift its focus to financial services, reported after market hours that the sale was approved by a 59 percent majority.

BlackRock's campaign, albeit unsuccessful, highlights how investors are becoming more active in seeking out better returns in Asia amid ultra-low interest rates and sluggish global growth. The trend has been given added weight by reforms in places like Hong Kong and Japan designed to enhance corporate governance and promote minority shareholder rights, giving investors ammunition to push back against company management.

"You have seen the success of activist funds in the United States improving businesses and increasing shareholder returns," said Seth Fischer, chief investment officer at Hong Kong-based activist hedge fund Oasis Management. "They are looking for further opportunities, bringing their critical know-how to Asia and saying, 'Let's produce the same things out here'."

According to data from research firm Activist Insight, the number of companies in Asia subject to one or more public shareholder demands more than doubled over the past two years to reach 31 in 2015, with nearly half successful, up from 30 percent a year earlier.

More than 65 percent of cases were instigated by overseas investors, according to Activist Insight, with U.S. fund Elliot Associates' ultimately unsuccessful move to challenge restructuring at South Korea's Samsung Group and Oasis Management's action tackling Japanese technology firm Kyocera Corp (6971.T: Quote) and videogame maker Nintendo Co Ltd (7974.T: Quote) among recent high-profile campaigns.

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The BlackRock sign is pictured in the Manhattan borough of New York in this October 11, 2015 file photo. REUTERS/Eduardo Munoz/Files