As our markets transition from active selection and passive ownership to passive selection and active ownership, it has implications for the shape of activism for our markets
The Indian market has seen a few instances of investor campaigns, but these have been limited to companies where “promoter” ownership is low. These and the count of resolutions that have been defeated do not capture the undercurrents, which are reflected in the increased tally of resolutions that investors are engaging in with companies. Still, Investors in India are set to adopt a different tone. This is because our markets are changing as we transition from active selection and passive ownership to passive selection and active ownership. This as Jeff Gramm, a fund manager and author of Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism, is also what is currently underway in the US. The broad implication for India Inc. is that investors will no longer wait till a company is broken to agitate to fix it but communicate their ideas – be it on board composition or capital allocation or concerns on ESG, more regularly. And that the pitch of the activists will not rise to the level seen in the US. But this will be so only if boards have their ears to the ground and act on feedback they receive.
Read our blog: Activist investing: What India Inc can expect