Who will be next on activist investors’ not so little hit list?

THAT squelching sound you can hear is chief executives shifting uncomfortably in their seats. Those that are paying attention have noticed something. It is that shareholders are ever keener to see activist investors get to grips with underperforming companies, to deliver the ultimatums more traditional City shareholders still think of as ungentlemanly. To shake trees and see what fruit falls off.

Yesterday Saga was the latest to come under attack. Elliott Capital Advisors revealed it has taken a 5% stake in the tour operator cum insurer. What Elliott plans next we can’t be sure, but it won’t be to sit passively by while the business falters.

They are an interesting bunch at Elliott. It was they who persuaded Whitbread to break itself up by selling Costa Coffee for nearly £4 billion (thanks very much, said the other shareholders).

More ruthlessly, Elliott fought the government of Argentina for 15 years over unpaid bond debts, detaining an Argentine naval training vessel in the process. Argentina settled.

Elliott might be more up for a scrap than most investors, but it’s not alone.

Figures from Lazard show that activ

ists have spent towards £6 billion buying shares in 25 UK companies in the past year.

Last month, the FT reported that private equity deal-making is at its highest since the peak before the last financial crisis. Private equity companies have $2.5 trillion of cash on hand, looking for a home, seeking a target.

One of the ironies of Brexit is that while on the surface it makes Britain a riskier place to invest, that very assumption has the effect of making lots of valuable assets look cheap.

Financial News reports that private equity firms are eyeing “bargains from Brexit Britain”. The paper quotes Philip Noblet of Jefferies thus: “Private equity sees UK public companies for the first time since the early 2000s as a rich vein of high-quality companies.”

That it believes it can pick off on the cheap.

Who might be a target? Any big company with an underperforming share price, I’d say.

So, some punts here. How about Sainsbury’s, reeling from the failure of its merger with Asda?

The largest shareholder Qatar would have to be in on the plan, but it first bought way back in 2007, since when the shares have done much less than nothing. So why wouldn’t it? A private equity consortium including CVC and KKR had a tilt back then too, when the shares were above 500p. They’d find it considerably easier to finance now since the stock is languishing at 199p.

Centrica has been a rumoured takeover target for several years, once at a mooted price of 300p a share. Those shares are now changing hands for 89p.

Let’s add to that list Imperial Brands and IAG, the owner of British Airways. Neither company is doing too badly, but rumblings of discontent can be heard.

Brexiteers might see bids for any of these companies as evidence of how strong UK business remains, how attractive our top companies are too foreign investment.

Remainers might argue that an awful political vote had enabled prime UK assets to be gobbled on the cheap.

Either way, nothing happening seems the least likely outcome.

Private equity companies have $2.5 trillion of cash on hand, looking for a home, seeking a target