Rise in shareholder activism sparks debate
A LatAm-specific form of shareholder activism is rising sharply, say market observers
A spurt of attempts by minority shareholders to influence
corporate management is sparking debate over the implications
for Latin America's stock markets.
Photo source: David Goehring
Some of the most high-profile recent cases of
activism in Latin America include Cartica Capital's dispute with CorpBanca over its
merger with Itau Chile, and Tempo
Capital's protests against the terms of the merger between Oi
and Portugal Telecom.
Investors like Cartica and Tempo argue their
actions could have a positive effect on regional stock
Others argue that across Latin America, further
advances in governance are necessary for investors to gain
comfort buying stakes in the region's corporate securities.
Increased awareness of shareholders' rights can improve
transparency and how corporate managers interact with
shareholders, they said.
Yet some are sounding the alarm. Monique Skruzny, a
founding partner of media and investor relations advisory firm
MBS Value Partners, said there are examples of minority
shareholders in Brazilian companies steering a positive
turnaround after gaining seats on boards. But she questioned
whether independent experts, rather than stock pickers, are
better placed to decide on strategy.
"I worry when I see a lot of activists with little
experience on boards of directors," she said. Some activist
investors in Brazil have been savvier than corporates at using
local media, she added: "Management needs the tools and ability
to make its cases, too."
Brazil's securities regulator, the CVM, expressed
cautious optimism on the rise of Latin American shareholder
activism: "The existence of shareholder activism is a natural
process and may bring very positive results," it told
LatinFinance. "When the different players involved are duly
conscious of their roles, dialogues are extremely productive,
technical, and contribute effectively to the capital markets'
See the full article in the latest
issue of LatinFinance here: The