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The head of a body representing large investors in the UK said he hoped expanding the organisation to involve listed companies would allow it to replicate the success of the Takeover Panel in resolving tensions in London’s ailing stock market.
Andy Griffiths, executive director of the Investor Forum, an industry group for asset managers, insurers and pensions groups, told the Financial Times the move was designed to help repair the “fractious” relationship between UK company boards and institutional investors.
Many directors have become frustrated at big investors’ reluctance to approve larger executive pay packages and what they see as a box-ticking approach to voting at annual meetings, driven partly by the rise in passive investment.
Those concerns are seen as one of the main reasons for the steady decline in the global standing of London’s equities markets, which have been hit by low valuations, a dearth of new listings and an outflow of companies either being taken private or moving their listings overseas.
Griffiths said his organisation wanted to ease relations between companies and large shareholder groups by repurposing the Investor Forum as an “investor and issuer forum”, which would convene corporate groups alongside its traditional membership.
He hoped the new body could replicate the success of the Takeover Panel, the industry-funded body that oversees acquisitions of London-listed companies and is staffed by senior lawyers and bankers. The panel was formed in the 1960s to address City concerns over the way the mergers and acquisitions market was operating.
“We think we’re in a similar situation in 2024, where the market is just not working as well as it could. There are lots of issues between companies and investors,” he added.
He said he expected the new body would be up and running this year under new leadership as he planned to step down from his position after a decade in the role.
Unlike the Takeover Panel, later put on a legal footing through legislation, the forum would be aimed primarily at facilitating debate rather than imposing new codes or rules, said Griffiths.
“It’s not about regulation. It’s not about the government telling us how to do things,” he said. “It’s about market practitioners getting together and figuring out how to make their market work as well as it can.”
The creation of the new body has the support of the Capital Markets Industry Taskforce, a group of City institutions pressing for reforms to reinvigorate the London market.
“We feel that too often the current regime, particularly in the stewardship space, is set up by default to be antagonistic to demonstrate challenge and such a regime cultivates mistrust,” it said late last year. The government has also backed the call to improve company-investor relations.
Griffiths said that he anticipated the initiative would be funded initially through contributions from investors and companies with the potential for a levy on market participants in future.
The Financial Reporting Council is also set to scrutinise the relationship between investors and companies in a review of its stewardship code.
