Thursday, August 23, 2012

ACTIVISM INFLUENCE PROMOTER ANIL AMBANI TO DO SOMETHING INDIA RARELY WITNESSES

THE RELIANCE POWER IPO THAT BECAME INDIA’S BIGGEST EVER IPO, SAW INVESTOR ACTIVISM INFLUENCE PROMOTER ANIL AMBANI TO DO SOMETHING INDIA RARELY WITNESSES – DILUTE HIS STAKE TO SUPPORT INVESTORS

Shareholder activism is not much in evidence in India. There have been some cases of shareholder activism by institutional investors such as the erstwhile Unit Trust of India but these have been few and far between. As for individual investors, they belong to two categories. The first category consists of the less informed and even less interested investors who are the “fill it forget it” types. They forget about the investment after filling the application forms for investment. The second category, miniscule smaller in number, reads company reports, analyses financial statements and raises issues at Annual General Meetings. Their activism helps companies to focus on essentials, but because it is sporadic and not sustained, it does not translate to shareholder activism of a scale that good governance warrants. We must also guard against personal agenda driven interventions amounting to shareholder adventurism masquerading as shareholder activism. Genuine well-intentioned shareholder activism, which India needs more of, will come only with investor education leading to investor involvement in the functioning of companies. Until then, institutional shareholders could be in the vanguard of shareholder activism, and not vote with their feet.




 
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