Capital Markets & Investor Relations Australia

Welcome to the latest edition of Global IR Insights, where FTI Consulting's Australian Strategic Communications team shares intel from our global network in capital markets communication and what it might mean for Australia.

How to spot the next M&A target

As targets and buyers bicker over valuations, what is one way to move discussions along in times of macroeconomic uncertainty? According to the Australian Financial Review, pre-bid stakes are increasingly driving Australian M&A activity, helping strategic buyers swoop in on rivals and getting private equity firms into due diligence discussions. This was recently seen on our shores with Silver Lake Resources’ $2.2 billion merger with Red 5.

Another notable change is the willingness of private equity buyers to get in on the action. Recently, PE firms have been using pre-bid stakes, outlaying significant sums of money without access to due diligence. That rarely happened in the past, and we can expect more of this to occur.

Pay strikes surge: Aussie companies face shareholder scrutiny?

Shareholder dissent on a range of company issues with executive pay used as a stalking horse is skyrocketing. Corporate proxy group, Georgeson, reports a nearly twofold increase in negative votes against remuneration reports in Australia's top 300 companies, jumping from 23 in 2022 to 40 in 2023. Superannuation funds and other investors are demanding accountability, especially amid economic concerns.

This signals a trend that companies are urged to address to avoid potential consequences such as higher public scrutiny, negative media, and shareholder disapproval. Ignoring this shift risks eroding trust and damaging reputations. Proactive shareholder engagement, increasing transparency and clear communication are essential to navigate this landscape.

ESG hiring boom is starting to cool

Amid the general pushback on ESG and related investments, recent data shows companies have slowed hiring on ESG-focused positions. The Wall Street Journal cites various reasons for these cuts, including investors seeking faster returns and corporate boards placing more importance on managing costs, supply chain, cybersecurity, AI, and geopolitical risks.

The drop in new ESG hires hasn’t necessarily weakened companies’ investments in those areas though, “Ninety-two per cent of chief executives stand by their ESG programs, while the remaining 8% have ramped them down” the article notes. Regardless of the pushback and intensifying scrutiny on ESG, the raft of new and potential regulations globally means subject matter experts will continue to be sought after, if perhaps through a different lens of regulatory preparedness, as opposed to investor demands.

On our shores, the ESG regulatory landscape is shaping up for Australian companies, with the impending mandatory climate-related financial reporting requirements coming into effect as early as H2 2024.

Newsletter collated by Annalise Batchelor and?Elodie Castagna.?For further information on these stories or to be added to the Global IR Insights newsletter distribution list, please contact [email protected]