UBS launches big data tool to protect against activist investor threatsBIG Data

UBS has launched a new big data tool to help clients fend off the threat of activist investors, as investment banks brace for a rush of such campaigns in the wake of the coronavirus crisis.

The Swiss bank, which has been building a team of investment bankers to help companies defend against activist campaigns in Europe, has launched a new digital system to help companies predict the risk of being targeted by activists — a major driver of mergers and acquisitions activity in recent years.

While activist investors, which take large stakes in companies in a bid to agitate for change at the top of the organisation, largely stepped back in the early days of the Covid-19 pandemic so as to give executives breathing space, they have since returned. In May, $3.3bn of activist capital was deployed, according to data from independent investment bank Lazard, which was a 159% increase on March.

Darren Novak, head of activist defence at UBS, said that Covid-19 was likely to exacerbate the problems of companies and provide an opportunity for activist investors in the second half of this year. “We anticipate seeing more M&A-related activist campaigns that will likely focus on seeking future opportunities for a quick sale or divestiture when M&A markets reopen,” he said.

His comments echo those of JPMorgan’s co-head of M&A Dirk Albersmeier, who told Financial News that there had been a “huge swing back to activism in the past two weeks”, which was likely to be a big driver of M&A.

UBS’s new system — called GUARD (Global Utility for Activism Risk and Defence) — aims to quantify the risk of a company being targeted by an activist by looking at 220 million data points and analyses more than 5,000 historical activism campaigns.

UBS follows a number of its competitors by launching sophisticated technology tools that can help both streamline the deal-making process and help clients assess the risk of an activist threat.

Goldman Sachs has a system called Jupiter to help companies see the risk of an activist campaign as well as automate parts of the initial public offering process. JPMorgan also has a team of around 40 senior bankers, technologists and data scientists all looking to automate part of the dealmaking process.

Meanwhile, in June Citigroup combined three business units — including the one advising firms on activist defence — into a new division that uses big data to advise corporate finance clients.

To contact the author of this story with feedback or news, email Paul Clarke



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