The new UK Investor Forum will
take a targeted and pragmatic approach to collective
engagement, with a focus on large companies with a diverse
shareholder base, according to its directors. They have also
made clear that activists won’t have a seat at the
|The Investor Forum's
principles and objectives
[click to read]
The Forum started to take shape last year under the
guise of the Collective Engagement Working Group. But details
on how the investor-led organisation will pursue its objectives
– namely, the promotion of long-term investment
strategies and creation of an effective model for collective
action – were not known until the group’s
official launch last week.
first discussion paper makes clear the group will become
involved in select situations in which it can add value.
"We are really trying to be investment pragmatists," the
Forum’s executive director Andy Griffiths told
IFLR. "We want to connect all the parties in the investment
chain much more effectively than they have in the past."
This means the group will draw together all stakeholders
– local and foreign investors, and company
representatives – to facilitate dialogue and help the
participants work towards mutually agreeable corporate
"Over the last few years there has been a lot of
dissatisfaction aired at AGMs, and the issues
aren’t later worked through as well as they might
be. We want to help create solutions to those problems," said
Griffiths, a senior adviser with Corsair Capital.
- Last week the UK Investor Forum announced its
board, principles, objectives and activities;
- It builds on the Kay Review and Collective
Engagement Working Group, and aims to make the case for
long-term investment and create an effective model for
collective action in the UK;
- Activists will not be able to take part, as they
do not subscribe to the Forum’s long-term
- The Forum will focus on large companies with
diverse shareholder bases; these are the companies in which
engagement has seen little success
- It will become involved in a situation at the
request of an investor or company; in 2015 it expects to take
part in two or three collective engagement
Answering the critics
Some City law firm partners believe the
initiative’s success depends on the extent
long-holding funds use the Forum to engage with the company in
which they invest, rather than going to management and the
But the Forum’s board members realise its
services will not be needed by all investors.
"The Forum will be best deployed where there are
issues at the very biggest firms with a very diversified
shareholder base," said Daniel Godfrey, Forum director and
chief executive of the Investment Management Association (IMA).
"That is where we can make a difference."
Effective engagement has been a lingering problem
for these companies, while it has been easier for mid-size
firms with a handful of large investors holding big stakes.
There were early fears that activists would be able
to participate in the Forum’s activities, giving
them another avenue to
further their growing influence in Europe.
But Griffiths said it is unlikely these investors
would be able to take part: "We hope to have a wide range of
members. But to become a member, you must subscribe to the
Forum’s values, principles and long-term
The activities of the group, which implements a key
recommendation of the
2012 Kay Review of UK Equity Markets, will fall under four
The innovation forum will run events and produce
research and educational materials. The other forums will be
instigated on a case-by-case basis at the request of a company
The collective investor forum will facilitate
dialogue between different stakeholders to limit the risk of
strategic or operational drift among the corporate members. It
is the new incarnation of the engagement action groups under
the Collective Engagement Working Group.
There had been speculation that this forum would
aim to create a single view among all stakeholders. But
Griffiths has made clear that isn’t the case:
"Consensus is not the goal – that is a very hard thing
This forum could prove most useful when, for example, a
company hears 20 different objections from its 20 major
shareholders. In this situation, executives often continue with
their corporate strategy, as the owners have not been able to
provide a cohesive alternative strategy.
We will be quite
targeted. We won’t be involved in every
situation you can imagine
In this situation, the forum will help those individuals
work towards understanding each other’s views. "If
we can’t create a solution, then
we’ll work to reduce the gap between views over
time," explained Griffiths.
The third arm is the advisory forum, which provides
confidential advice to investors and companies on a one-on-one
basis. And the fourth, the event-driven forum, will help
protect shareholder rights during complex corporate
The Forum’s functions will be performed by
situation-specific engagement groups. However the board expects
a limited number will need to be formed, at least in the
"In 2015,we will simply be engaged in a couple of the more
complex issues where there is investor or company demand for us
to be involved," said Griffiths, referring to the collective
engagement forum. "We will be quite targeted. We
won’t be involved in every situation you can
One of the Forum’s biggest challenges,
as identified by the board and third parties, is its ability to
distinguish itself from other investor initiatives. This
includes the IMA (which is seed funding the Forum), Association
of British Insurers, and National Association of Pension Funds
– all of which are backing the organisation.
But the Forum is intent on not replicating these
other efforts. It will not be writing new policies and
procedures, will not simply be another entity speaking on
behalf of investors, and will involve all stakeholders
– including international investors.
"We have set up afresh as we want to appeal to the global
shareholder register that now provides capital to UK
companies," said Griffiths.
Its independence is another way of earning the
industry’s trust and respect. The Forum is a
not-for-profit community interest company, to demonstrate it
has no conflict of interest.
Godfrey said a big challenge would be satisfying
some international investors that collective engagement can be
done in a way that doesn’t create legal regulatory
In 2015,we will
simply be engaged in a couple of the more complex
The UK market abuse and takeover regimes are
complex. They are not clearly understood by foreign
shareholders, many of whom are wary of falling foul of the
rules when speaking with the companies in which they invest. To
this end, the Forum has set up a legal panel to evaluate and
demonstrate the safest environment for activities to take
"We want to make sure investors and companies are
very clear on where the risks and safe areas lie in collective
engagement. That is a very important part of this work," said
Griffiths, adding that the board is grateful for the support
received from the legal community.
The industry should not, however, rush to assess
the organisation based on its ability to overcome these
"We want to make sure the Forum isn’t
judged to be a success or failure too quickly, especially as it
is premised on achieving long-term, rather than short-term
objectives," Godfrey said.
While it is difficult to set targets, he said its
success might be reflected by its participation in engagements
that lead to better long-tem outcomes over time.
"Another [measurement] is whether market
participants – companies and investors - feel they are
under less pressure to deliver in the short-term and better
positioned to deliver long-term outcomes," he added.
The Investor Forum’s website is here and
first discussion paper here.
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