The $351bn California Public Employee Retirement Plan (CalPERS) doesn’t plan to take immediate action to protect its equity investments from corporate structures that limit investors’ voting rights, saying that it will wait to see how regulators, index providers, and stock exchanges address the issue first.
Investors are increasingly concerned about dual-class stock structures – particularly after the 2017 initial public offering (IPO) of Snap, in which the Snapchat maker offered stock with no voting rights at all – and have pressured regulators and major market players to step in and protect investors’ rights. The pension fund has a “material” allocation to companies with dual-class voting structures, investment staff said at the megafund’s April meeting – about $20bn, or about 10% of the fund’s $180bn global equity portfolio. CalPERS has about $1bn invested in securities that offer no voting rights, including Snap and some master limited partnerships.
Dual-share structures pose a dilemma for CalPERS, which believes in equal voting rights, but also wants as broadly diversified a portfolio as possible, CIO Ted Eliopoulos said. CalPERS is in no rush to take action, however, since its investment staff believes that there will be a lot of activity and debate among regulators, exchanges, and index providers in the next 12 to 18 months, Eliopoulos said.
“We do see quite a roiling debate by market participants about what is the appropriate treatment for regulators, for stock exchanges, for index providers given this more recent development of more and more companies coming to market with restricted or non voting share rights,” Eliopoulos said. “We’re in the thick of it, the CalPERS staff is right in the thick of all those discussions.”
Read the full story: CalPERS plays waiting game on dual-share voting structures
Published by Money Management Report/Pageant Media