Fund is set up to invest in smaller stocks with a view to working with managements to improve in areas such as corporate governance
Mumbai — Some former Tata Group executives have teamed up with a veteran investor to seek to bring change at Indian companies, in a rare attempt to influence management in a country where shareholder activism has largely failed to take hold.
Sankaranarayan, who spent more than two decades at Tata Group, says the fund deliberately shunned the activist moniker and positioned itself as an environmental, social and governance vehicle because aggressive activism just would not succeed in India. The reason, he says, is that founding shareholders typically tend to own as much as 40% of companies. Instead, the fund will invest in smaller companies where owners are more likely to be open to change, he said.
The fund will differ from conventional ESG vehicles in that it will pick 20 to 25 companies with lower or average ESG scores that have the potential to improve. Typically, ESG funds select companies with higher scores in such rankings. The fund has a minimum ticket size of about $100m and will target large investors such as university endowments, sovereign and pension funds.
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