Shareholders stand up to boards and turn to financial PR to make their case

Investors are appointing financial PR agencies as they argue with boards over profits and pay.

Conflict: Mining firm Ferrexpo locked in debate with shareholders
Conflict: Mining firm Ferrexpo locked in debate with shareholders

A new trend towards dissident shareholders is providing a welcome business boost for City PR agencies, it emerged this week.

In recent weeks, there have been vocal protests from groups of shareholders against the boards of Shell, BP, RBS, Xstrata, Next, Amec and Provident Financial.

While many of these protests are aimed at directors' pay, they still offer opportunities for financial PR firms to help some shareholder groups with more specific aims to make their case.

Shareholders locked in an argument with London-listed mining firm Ferrexpo have brought in Hogarth PR as it seeks to block its planned share buy-back deal.

Hogarth will work with Ralkon Commercial and Fayver Properties, which owns ten per cent of the Swiss mining firm, to convince shareholders to reject the share buy-back.

The activist shareholders are ultimately controlled by Ukrainian businessman Igor Kolomoisky. He is locked in a battle with Ferrexpo's billionaire chief executive Kostyantin Zhevago, who holds a controlling stake in the company.

'Representing dissident shareholders is similar to the PR around a bid battle,' said John Olsen, managing partner at Hogarth. 'We are helping them to put their case across to the board and the wider shareholder body, which is being potentially equally disadvantaged.'

The firm, which operates primarily in the Ukraine, is represented by Finsbury, which advised it on its 2007 London IPO.

Peter Russell, associate at Finsbury, said: 'We wanted to show that the shareholder did not have full credibility in what it was doing in terms of the mandate Ferrexpo had been given by other shareholders.'

As the Ferrexpo battle rumbles on, it is indicative of the emboldened position of investors in the current market.

Olsen said: 'Although the Ferrexpo case is not about business performance, there is no doubt that boards are finding themselves under a lot more scrutiny. As shareholders want to make their voices heard, it is becoming an increasingly active area in financial PR.'

But Olsen warned that agencies needed to carefully consider the shareholder clients they took as some shareholder revolts would inevitably lack wider support and credibility.

HOW I SEE IT

John Antcliffe

Chief executive, Smithfield

The performance of financial markets over the past 18 months has meant there are a lot of disgruntled shareholders. Those who have seen significant falls in the value of their investments have every reason to encourage boards to restore that value - if they think additional pressure can be exerted on the board through the media it is a logical step to use a financial PR firm to help.

In the past, activist shareholders may have felt their complaints were falling on deaf ears and are now using the media to put a spotlight on the company and increase pressure on the board to effect change themselves.

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