TORONTO (Reuters) - Canadian proxy solicitation firm Kingsdale Shareholder Services will expand into the highly competitive U.S. market by opening a New York office next month and could bolster the move with acquisitions, its chief executive said on Tuesday.
Toronto-based Kingsdale, majority-owned by MDC Partners Inc, is also looking to launch in the United Kingdom and Australia in the next two years.
Proxy solicitation firms traditionally have solicited votes for annual meetings and other corporate events. But they now play a major role in helping activist investors and companies reach out to shareholders to win their support in proxy battles or hostile takeovers. Kingsdale says its business has doubled in the last two years.
“The U.S. market is worth over $1 billion, but there’s a lot of fragmentation. We hope to fill that void,” Kingsdale Chief Executive Wes Hall told Reuters in an interview in Toronto.
The company’s New York office will have about a dozen employees when it opens in the middle of March, and that number could reach 30 to 40 in the first year, he said.
In 2012, Hall helped Bill Ackman’s activist hedge fund Pershing Square Capital take on Canadian Pacific Railway Ltd. The watershed battle led to a boardroom sweep for the Pershing slate, elevated Kingsdale’s standing and put corporate boardrooms across Canada on notice.
Other Canadian proxy solicitation providers include Shorecrest Group, D.F. King Canada and Laurel Hill Advisory Group.
Kingsdale’s expansion comes at a time when shareholder activism has been on a global ascent. Activists applied pressure on 344 companies worldwide in 2014, up 18 percent from 2013, according to data from research firm Activist Insight. Activists hold $237 billion in equity assets globally, the report said.
“Activism is becoming an asset class in itself. We feel the industry will explode,” Hall said.
U.S. players providing proxy solicitation services include MacKenzie Partners and Innisfree M&A Inc.
Kingsdale, which was an advisor in the Jana Partners-Agrium battle and BHP Billiton’s $39 billion bid for Potash Corp, is eyeing U.S. acquisitions to increase its scale, Hall said.
Kingsdale has evaluated several potential targets and is in advanced talks with one of them, he said. The company is prepared to pay four to six times earnings before interest, taxes, depreciation, and amortization (EBITDA) for the right target, he said.
Editing by Jeffrey Hodgson and Paul Simao