n Personal Finance Newsletter - The role of shareholders : the African Bank debacle

Volume 2014, Issue 404
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The drama around African Bank (Abil) during the first two weeks of August has raised many questions. Perhaps the biggest of them is whether we should have seen this coming. In particular, investors who have been exposed to the company's decline in one way or another want to know whether big institutional shareholders acted responsibly. Were they asking the right questions, engaging thoroughly with management, and playing a role in making sure the business was sustainable? Certainly there has been some reputational damage to those asset managers who held Abil stock or Abil debt, and no doubt some serious internal examination is taking place around the decisions that led to those exposures. However, that is not the only criticism that has been levelled at the likes of Coronation, Liberty, and the Public Investment Corporation (PIC), who we know hold big equity positions on behalf of investors. Many are asking whether they shouldn't have made better use of their influence to change the way Abil was doing things.

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