Activist investor Elliott gets support for structural changes at BHP Billiton
Sydney — Global fund manager Aberdeen Standard Investments fully supports activist investor Elliott Management’s push for widespread structural changes at mining giant BHP Billiton, a senior Aberdeen manager said on Wednesday.
Commenting a day before BHP holds its Australian general meeting in Melbourne, where the board of the world’s biggest mining house is expected to come under renewed scrutiny over its ill-fated $20bn investment in US shale, Aberdeen Asia MD Hugh Young said Elliott was "100% correct" in pressuring for change.
Aberdeen is the third-biggest shareholder in BHP’s London-listed stock, with a 4.88% stake, just behind Elliott, which has a 5.04% holding, according to Thomson Reuters data.
Elliott, founded by billionaire Paul Singer, has been pushing for BHP to jettison US oil and gas assets and dismantle its dual-listed structure. It has also staged an unusual public campaign to muster small investors to help drive changes at BHP, one of the most recognisable corporate names in Australia, using social media to state its position.
Speaking to reporters, Young said Aberdeen was in "very close contact with Elliott", despite Elliott holding "slightly shorter" investment horizons than Aberdeen.
Aberdeen manages $718bn in assets and is known for taking a long-term view on investments. In April, it said Elliott’s plan was okay in principle but added that it may prove complex.
BHP chairperson Ken MacKenzie has previously rejected any suggestions that Elliott was dictating polices at BHP.
BHP entered the shale business at the height of the fracking boom in 2011 and invested billions developing the operations. The fall in oil prices since then has led to pre-tax write-downs of about $13bn.
Last month, BHP said divestment of a small portion of onshore shale acreage was completed in the September 2017 quarter, with "work under way" to exit the remaining acreage.
Young said the timing of future divestments was up to BHP, "but they should not necessarily succumb to short-term pressure to do something for the sake of doing something".
Elliott also wants BHP to abandon its London stock listing, while retaining an Australian bourse listing, a move BHP insists would cost more to implement than it would save.