Bankers see activist investor campaigns gaining strength abroad

By Michael Flaherty

LOS ANGELES (Reuters) - Bankers are seeing more evidence that activist investor tactics launched in the United States several years ago are making their way abroad.

So far this year, international activist campaigns are up 30 percent, Robin Rankin, co-head of global mergers and acquisitions at Credit Suisse Group AG , said during a panel on Tuesday at the Milken Institute Global Conference in Los Angeles.

"We're going to see some traditional activism all over the world," she said, citing countries in Europe and Asia as examples.

Last year, activist hedge funds began launching campaigns abroad to shake up management teams, prompt or interrupt mergers and generally get companies to improve financial returns, after U.S. markets became more challenging.

Among the activists pushing abroad are Elliott Associates, which targeted companies in South Korea and Hong Kong in the past year, and ValueAct Capital, which is on the board of British engine maker Rolls Royce Holdings Plc (NYSE: RR). Third Point is pushing changes at Japan’s Seven & i Holdings Co <3382.T>.

"Around the world, our corporate clients outside of the States, have suddenly" become more aware of activist investors, Rankin said.

Steve Krouskos, a vice chairman at Ernst & Young, said the nature of activist campaigns abroad will be led more by frustrated shareholders than traditional activist hedge funds. He said he is already seeing investors in European companies publicly angling for greater efficiency and "value creation," and predicted there is more to come.

One of the factors spreading activism abroad is the scarcity of targets for larger U.S. activists. Valuations are also lower than they are in the United States, where stock markets are back near historic highs.

Jennifer Nason, who chairs JPMorgan Chase & Co's (NYSE: JPM) global technology, media and telecommunications investment banking group, said one constant across the globe was that an activist must have a powerful message, a loud voice and an attractive target to make a campaign successful.

"Sometimes it's not so much about a campaign for change," she said. "Activists often target high-profile CEOs, high-profile, branded companies, high-profile parts of the world, because the exercise is about driving value for their investors at the end of the day."

(Reporting by Michael Flaherty; Editing by Bill Rigby)

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