The week in investor relations: Stock market theory protects coral reefs, abrdn buys Interactive Investor and Grab’s IPO breaks records
– Researchers at the University of Queensland in Australia are using stock market theory to help protect coral reefs, according to the Guardian. The academics have used modern portfolio theory, developed by Harry Markowitz in the 1950s, to identify coral reefs that are best placed to survive global warming and could, in the future, repopulate other reefs. ‘It’s essentially a strategy to help us make decisions about what to protect, if we are to have corals at the end of the century,’ said climate scientist Professor Ove Hoegh-Guldberg.
– Abrdn, the UK-based asset manager, agreed a £1.5 bn ($2 bn) deal to acquire Interactive Investor, an online retail investing platform, reported the Financial Times (paywall). The takeover by abrdn, formerly known as Standard Life Aberdeen, highlights how asset managers are searching for growth amid declining fees and rising costs, noted the article. Interactive Investor has grown to be the UK’s second-largest funds supermarket through years of deals, and received a boost from the uptick in retail investing during the Covid-19 pandemic.
– Grab, the Singapore-based ride-hailing app, achieved a value of $40 bn when it went public this week, making it the biggest ever US listing by a South East Asian company, reported the BBC. The company, which doesn’t expect to make a profit until 2023, joined the public markets via a merger with a special purpose acquisition company. Grab released financial results for the last three quarters, despite not needing to, in a bid to ‘address criticism that it is avoiding public scrutiny over its financial performance,’ according to the article.
– In other listings news on ride-hailing apps, Chinese company Didi announced that it will delist from the NYSE just five months after going public, according to Reuters. The tech company ‘raised the ire of Chinese regulators for ignoring a request to put its US IPO on hold,’ reported the news service. In June, Didi raised $4.4 bn in the US even though regulators had asked it to postpone the listing while they reviewed its data practices. The company plans to list instead on the Stock Exchange of Hong Kong, sources told Reuters.
– The members of the Corporate Reporting Dialogue, which was set up to support consistency and comparability between sustainability reporting approaches, decided to dissolve the initiative, given recent steps toward consolidation, reported Accounting Today. Last month, the IFRS Foundation announced the creation of the International Sustainability Standards Board. The new body will consolidate the Value Reporting Foundation – which oversees the SASB Standards and the International Integrated Reporting Framework – and the Climate Disclosure Standards Board.
– CNBC reported that Jack Dorsey stepped down as CEO of Twitter. Parag Agrawal, the company’s chief technology officer, took over the role. Dorsey was serving as CEO of both Twitter and Square, his digital payments company. Dorsey will remain a member of the board until his term expires at the 2022 AGM, the company said. Salesforce president and COO Bret Taylor will become board chair, succeeding Patrick Pichette, a former Google executive, who will remain on the board as chair of the audit committee. ‘I’ve decided to leave Twitter because I believe the company is ready to move on from its founders,’ Dorsey said in a statement, although he didn’t provide any additional detail on why he decided to resign.
– The SEC released guidance for companies on how to properly recognize and disclose compensation costs for ‘spring-loaded awards’ made to executives. Spring-loaded awards are share-based compensation arrangements where a company grants stock options or other awards shortly before it announces market-moving information such as an earnings release with better-than-expected results or the disclosure of a significant transaction. According to the new guidance, non-routine spring-loaded grants merit particular scrutiny by those responsible for compensation and financial reporting governance at public companies. The SEC staff believe that as companies measure compensation paid to executives, they must take into account the impact the material non-public information will have when released.
– Activist investor Bluebell Capital Partners has called on commodities group Glencore to spin off its thermal coal business, divest non-core assets and improve corporate governance, the Financial Times reported. Bluebell wrote to the miner and trader earlier this month, urging it to ‘chart a new future’ without coal, the world’s most polluting fossil fuel. Bluebell said Glencore’s plan to run down its coal business and close all its mines within the next 30 years – a strategy that has been backed by its biggest shareholders – is both ‘morally unacceptable and financially flawed’. It wrote in a letter: ‘A clear separation between carbonized and decarbonized assets is needed to increase shareholder value.’
– According to CNBC, a small but growing focus in the ESG investing movement is gender equity. ‘Gender-lens’ investing prioritizes companies with higher representation of women on their boards and in management positions, as well as those that score well on pay equity and other workplace policies that particularly help women. ‘We’re seeing more investors, primarily women... looking to bring a gender lens to their portfolio,’ said Kathleen McQuiggan, a financial adviser at Artemis.
– Reuters reported that Chris James, founder of Engine No 1, said a failing governance structure propagated by a management without a strategy for the energy transition was behind the hedge fund firm’s campaign to bring independence to ExxonMobil’s board. ExxonMobil has been an outlier in transparency and accountability regarding its environmental impact, James said. Three of four people with energy transition experience nominated by Engine No 1 joined ExxonMobil’s board earlier this year.