The rise of the Asian activist investor
Not many companies whose profits have in essence flatlined over the past decade have seen their share price more than triple. By that measure Fujitec, a Japanese lift manufacturer, is a rare beast. The reason for its bull run is not past performance, but a growing expectation of change through investor activism, once anathema to Asian boardrooms. The company has faced a years-long campaign from activist investors, which led to the dismissal of three board members earlier this year. This was soon followed by the replacement of Fujitec’s chairman, the son of the firm’s founder.
Shaking up elderly, conservative and family-dominated firms in parts of Asia is getting easier. The number of companies subjected to activist demands across the region has risen markedly in recent years, from 102 in 2017 to 188 last year and 167 in only the first half of 2023, according to Diligent Market Intelligence, a research firm. That has raised Asia’s share of the global total from 10% to 23%, overtaking Europe (see chart 1). In the past decade a wave of shareholder-friendly rulemaking has swept the region, and a new class of Asian activist investors is emerging.
The opportunities are enormous. Stock valuations across the region are often low, particularly for middling companies outside the gaze of international investors. Management in hock to employees, related companies, founding families or government interests are found across Asia. Vast cash piles have been generated too. The non-financial companies in the Asia-Pacific region worth more than $10bn sit on $1.94trn in cash, over 50% more than they did five years ago. Cash-rich firms with entrenched management and low valuations are ripe for a shake-up.
2023-08-31 08:03:12
Post from www.economist.com
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