Brazil pension fund turns into a $50 billion activist

Bloomberg

When BRF SA, the Brazilian food giant that produces everything from chicken to chocolate pies, reported a record annual loss for 2017, it took less than 48 hours for its second-largest shareholder to act.
Previ, Brazil’s biggest pension fund, sent a letter in February demanding BRF Chairman Abilio Diniz convene a shareholder meeting to remove the entire board, including himself. After a two-month fight, Previ got its way: Investors voted in five new directors and replaced Diniz with Pedro Parente, who’s credited with turning around the country’s state-owned oil company, Petroleo Brasileiro SA.
That success is just the latest example of how the pension fund, which counts more than 200,000 current and former employees of Banco do Brasil SA as participants, is using its 180 billion reais ($50 billion) in assets under management as ammunition in a minority-shareholder rights war.
“BRF kept showing successive results that were a concern for us as shareholders,” Guei-tiro Matsuo Genso, Previ’s chief executive officer, said in an interview in Sao Paulo. “We decided to work together with other dissatisfied investors to intervene, but within what we believe was the best way — through the company’s governance; in this case, the board.”
As part of its new activism, Previ will stop participating in groups with controlling interests in a company, which limit the pension fund’s ability to exit investments whenever it wants.