Shareholder activism is on the rise in the UK. The primary driver for this increase is SABA Capital, who have taken positions in a number of UK and European Investment Trusts. At the start of 2025, SABA requisitioned seven shareholder meetings at seven different listed Trusts, and while in each case the board prevailed, the campaign sent shockwaves through the industry, which continue to be keenly felt.
What trends are shaping shareholder activism?
Other shareholders are now following suit in an attempt to realise a return through a narrowing of the discount to NAV so prevalent in this sector. Coupled with this new wave of Investment Trust activism is a wave of ESG shareholder activism and a rollback on ESG commitments triggered by the Trump administration, amid wider UK market anxiety. This is something driven by a flat IPO market and an increase of overseas listings. This means Boards, IR teams and company secretaries need to stay ahead of evolving trends and tactics.
The gateway to many activist campaigns has not changed. Governance fundamentals can often be the entry point onto a Board. Where Boards do not meet diversity targets, are long tenured or when directors are overcommitted, activists are leaning closely into themes that will appeal to an ever-increasing index and passive investor mindset more closely aligned to proxy advisor research and recommendations.
Increased pressure on investors
Facing a stagnant IPO market and buoyant mid-market take-private M&A transactions, investors are under increased pressure to find new investment ideas, differentiate themselves from their competitors and publicly demonstrate that boards are being held to account. It is no coincidence that an increasing number of traditional, long-only investors are finding their voice in the press, particularly in M&A situations.
Investment Trust activism is not unique to the UK market. However, it is different from the US in how these Trusts are owned. Many UK Investment Trusts are largely owned by retail and passive Private Wealth investors who do not typically vote with the same regularity as traditional long-only investors.
Cas Sydorowitz and Aaron Bertinetti discuss the changing trends in shareholder activism
Cas Sydorowitz, head of Georgeson Advisory, and Aaron Bertinetti, CEO of Investor Engagement North America at Georgeson, share their observations, and discuss how companies can prepare for what’s ahead.
What new tactics are used by investor activists?
Activists are going back to first principals, focusing on governance fundamentals and company performance. Increasingly, they are looking to install one or two directors onto Boards, aiming to leverage their influence and improve profitability through buybacks, dividends and corporate actions.
Some of the approaches include:
- Swarming – Multiple activists target the same company, director or issue simultaneously.
- Bumpitrage – Event-driven activists are pushing harder to extract more value from deals already underway through bumpitrage. A record number of UK M&A deals have failed or switched from a Scheme of Arrangement to a Tender Offer this year. Long-only investors are struggling to redeploy proceeds due to a paucity of IPOs bringing new appealing stocks to the market.
- CEO succession – Poor leadership or weak succession planning is being targeted, leading to high CEO turnover.
- Targeting executive pay – Pay packages are being used as a proxy issue, especially when the Board is underperforming.
- Directors over the Board – Investors are increasingly targeting individual directors rather than the entire Board. It’s faster, more cost-effective and more impactful. Companies should continue to assess Board risk exposure.
Why is there an increase in settlements over proxy fights?
As activists focus on a small number of directors, more companies are opting to settle rather than fight. Not all shareholder activists are interested in a proxy fight.
A proxy fight is expensive. For both sides, lawyers, PR teams and proxy advisors mean the costs add up. They are high profile and come with a high risk of failure. Today’s geopolitical upheaval means proxy battles risk stalling strategic initiatives and distracting Boards. Settling early to avoid a multi-year public fight might be preferable, but if you get it wrong, activists may see the company as a soft target in the future.
Georgeson can help you identify the right response.
What new formats and channels are shareholder activists using?
Activists (and companies) are adapting to new media, with traditional formats like press releases and white papers are being used alongside modern channels. These include:
- Educational videos and campaigns – Helping investors to understand issues and how to vote.
- Full social campaigns – Activists are conducting social campaigns to get support and create buzz.
- Network building – Events such as Investor Forum UK are being used by activists to network with their fellow investors.
- AI generated news flow – Activists are effectively leveraging algorithms to create content from public voting disclosures.
- The dark arts – Activists will employ Private Investigators and Forensic accountants to dig deep into the dark web, accounting anomalies or ‘skeletons in the cupboard’.
How to prepare for shareholder activism?
Your investor engagement, defence and vulnerabilities should be mapped and prepared, whether you see an activist threat around the corner or not. By being proactive with investor outreach, conducting defence drills or scenario planning, you can ensure the whole team is ready, whether it’s for an amicable settlement or a long-term proxy battle.
Georgeson can help you to adapt to evolving investor activist tactics. Whether you’re facing an unexpected requisition notice, tracking register movements or preparing for your AGM, our advisory teams can support you through every step. Georgeson has been at the forefront of this industry for over 90 years and has the expertise and track record to answer your every need. Ranked #1 by Bloomberg, why settle for anything else?