In the second half of 2024, there was a pronounced spike in the number of activist investing campaigns which took place in the UK with over 50 companies publicly targeted across the year, a rise of 30% vs the previous year as activist activity reached its highest levels since 2019. This continued into 2025 with some of the largest FTSE companies facing activists demands and despite tariffs provoking market volatility, the UK remains ripe for opportunity with activist activity expected to remain elevated for the foreseeable future as it experiences a new wave of shareholder activism.
For the best part of a decade prior to the pandemic, there was a gradual crescendo in UK activism with over 130 companies facing public demands from activist investors in a two-year period between 2018 and 2019. The UK was consistently the second busiest market (behind the US) for activism and frequently accounted for more than 50% of the campaigns across the whole of Europe.
However, while activism has quickly bounced back in North America over the past couple of years with activity recovering to pre-pandemic levels, activism campaigns in Europe have remained depressed with UK activity remaining especially low post Brexit. Activism activity in Asia has now surpassed European levels with Japan replacing the UK as the ‘hot’ market for activist investors outside of the US.
Macroeconomic factors have largely been responsible for this with geopolitical uncertainty, the global energy crisis, high interest rates and inflation being felt more keenly in Europe than on other continents. US investors, who had been driving the majority of activism in the UK previously, turned their attention back home to focus on unlocking value within the newly shaped US corporate landscape which the pandemic had created. Additionally, governance reforms in Japan and Korea alongside attractive balance sheets with value waiting to be unlocked also saw US investors turn their attentions further east.
However, with a price to earnings ratio averaging 50% lower than their US counterparts, UK stocks remain cheap which is attracting US investors back to the UK. Prominent US activists, Elliott Management (BP), Trian Partners (Rentokil), Third Point (Soho House) and Engine Capital (Smiths Group) all ran public campaigns in the past 9 months. The common theme has been to push UK companies to look at divestitures and/or sales given the favorable conditions for take private deals and the desire for activists to streamline businesses so that they can become more efficient and profitable as they focus on long-term growth. Similarly, asking companies to move their listings to the US or another jurisdiction is an increasingly popular demand with Third Point allegedly having engaged with a number of large FTSE companies encouraging them to relocate from London to New York in order to bring valuation multiples in line with industry peers. In the case of Rio Tinto, Palliser Capital argued that unifying the company’s DLC structure would unlock significant shareholder value and ensure better alignment between the global mining giant’s workforce and operational focus should it move its primary listing to Australia.
In addition to Palliser, other ‘homegrown’ activists have also returned to the fore with Harwood Capital, Gresham House, Gatemore, Metage and Sparta Capital all particularly active in 2024. Furthermore, several new activist hedge funds have been established in London, notably Finch Bay Capital which was founded by Elliott and ValueAct alumni Leo Markel and Daniel Urdaneta, alongside Spur Value Partners whose principal, Til Hufnagel, recently left Petrus Advisers to start his own fund.
In the UK investment trust sector, Saba Capital took the unprecedented step of requisitioning EGMs at seven different companies at once in order to put pressure on funds to narrow their NAV discounts and achieve higher returns. While this approach was notable for its aggression, there has been a broader trend of activists conducting more of their engagement in the public arena as they look to amplify their concerns to boards. There appears to be a collective frustration across not just shareholder bases but other key stakeholder groups when it comes to the performance of not just individual companies but the UK capital market as a whole, with a strong desire to see changes made in order to reverse the post-Brexit decline. Activists appear to be tapping into this feeling by using stronger rhetoric as a way of putting companies under pressure, knowing that this is more likely to resonate with investors and other stakeholders, helping them win support given the appetite for change.
Several investors have mentioned that as the gap between the US and UK markets has widened over the past decade or so, there is currently a huge amount of unrealized value at UK companies, with ample opportunity to enact M&A or operation changes in order to boost shareholder returns. Prior to the pandemic, M&A demands frequently accounted for more than half of the activism campaigns in the UK and so if M&A picks up in the second half of 2025 as anticipated, there will be more opportunities for activists to both make and disrupt deals ensuring that activity levels remain high and maybe even surpass the previous highs we saw at the end of the last decade. Alliance Advisors ranked in the top five global activism practices in 2024 and remains well placed to help companies and investors both prepare for campaigns ahead of time and achieve success when the stakes are at their highest.
