LatinFinance - July/August 2014 - 10

COVER
STORY
Activist shareholders are forcing change in corporate management across
Latin America - with big implications for how the region's corporations
do business and potentially also for their cost of funds.
By Dominic O'Neill and Katie Llanos-Small

The
Shareholder
Reformation
F
or Teresa Barger, Chilean billionaire Álvaro Saieh's luxurious Fifth Avenue apartment
provided a welcome respite from the New York winter one bitterly cold day last December.
Barger, managing director at Cartica Capital - a shareholder in CorpBanca, the Chilean
bank Saieh controls - says the businessman that afternoon graciously offered her a tour of his
residence, including a viewing of his private collection of early Renaissance Italian art, much
of it dating back to the thirteenth and fourteenth centuries.
"He's very personable, very cultured," Barger says in an interview. She left the meeting
reassured that Saieh and CorpBanca would act in the interest of all shareholders - including
minority investor Cartica - in a proposed M&A deal. That's precisely what CorpBanca, Chile's
third largest commercial lender, says it did.
But by June, Cartica and Saieh were on opposite sides of an increasingly acrimonious legal
battle as the asset manager sought to block the merger of the Chilean bank with the Chilean
operations of Brazil's Itaú, alleging the deal unfairly benefits the control group (see box,
page 13).
The case is the most prominent of a number of recent examples of shareholder activism,
where minority investors seek to gain a greater say in companies' activities - a phenomenon
experts say is on the rise across the region. While corporations and minority investors in
Latin America are engaging with each other more often than ever before, the falling out
between Cartica and Saieh demonstrates that such shareholders are increasingly a force to be
reckoned with.
Minority investors in emerging markets have rarely tended to go public with their gripes

10 L ATINFINA NCE.COM - July/August 2014

about the management of individual
companies in which they invest - and
even less so via the courts - partly because
of the predominance of control groups.
"You need to collaborate to make things
happen," says Pedro Andrade at Brazilian
fund manager IP Capital Partners.
Despite its action against CorpBanca,
Cartica prefers not to be described as an
activist fund in the more aggressive, US
mold, in which investors often take control
groups to court while fighting pitched
public relations battles. "US activists have
taken a more aggressive strategy than what
we think is successful in emerging markets,"
says Barger.
Shareholder activism in Latin America
has instead so far generally meant quieter,
more negotiated efforts - even by pension
funds - to ensure minority investors'
concerns are being properly taken into
http://www.LATINFINANCE.COM
LatinFinance - July/August 2014

Table of Contents for the Digital Edition of LatinFinance - July/August 2014
