India’s First Proxy Advisory Firm: Ingovern

Defining the term: Proxy advisory firmProxy advisory firms help institutional investors, who are large shareholders of companies, make informed decisions on how to vote at company shareholder meetings like AGMs, EGMs, postal ballots and court-convened meetings. Proxy advisory firms also monitor the corporate governance health of companies, and assist institutional investors mitigate risk in their investments.

Ingovern is the first firm of this kind in India that started to offer these services in 2010. The services can be categorized as under:

• Proxy Vote Recommendations
• Corporate Governance (CG) Scorecards
• Risk Monitoring Services
• Vote Execution Platform

The Motive

InGovern was started with the belief that institutional investors – FIIs and domestic mutual funds, though having significant stakes in companies - rarely ever raise their voice against errant behaviour by promoters of companies. Unfortunately, in the handful of situations this happened, it was too little, too late. InGovern aims to change this by making Vote Recommendations and urging institutions to go and vote at shareholder meetings.

Ingovern Team

Shriram Subhramanian, a PGDM from XIM, Bhubaneshwar also holds a Masters in Financial Engineering from Nanyang, Singapore and Carnegie Melon and he spearheads Ingovern. With over 17 years of experience in capital markets, prior to founding InGovern in 2010, Shriram has travelled across the globe and has acquired invaluable knowledge in this field. Usha is the cofounder at Ingovern with 7 years’ worth of experience as a consultant. She is an MBA from JBIMS, Mumbai.

The rest of the team comprises mostly of post graduates in banking & finance and graduates in commerce and the likes. The team started with a lot of research on prevalent practices in India and abroad to develop a framework and initial reports. After meeting potential customers to assess the demand, Ingovern was bootstrapped.

Business model

Clients – institutional investors – are charged on a subscription basis. For one off analysis/research, charge is based on the effort and expertise involved.

On the marketing side, Ingovern has a relationship with Broadridge, the world leader in proxy vote processing. They carry Ingovern’s Vote Recommendations on ProxyEdge, their proprietary platform, reaching clients worldwide; many of who have invested in India.

The Gap in the system

Shriram has a strong viewpoint here, “There is a very lackadaisical attitude by institutional investors to exercise their shareholder rights. Institutional investors, be it the mutual funds or insurance companies or banks, should act more responsibly and demand better governance and disclosures from companies and promoters. Errant promoters and failure by promoters and management should be punished. This will lead to enhancing the breadth and depth of Indian capital markets. We also hope that the government (represented by the Ministry of Corporate Affairs) and regulators - SEBI, RBI, and exchanges will proactively work towards better corporate governance.”

The Road Ahead

InGovern is currently working towards constituting an Advisory Committee of 5 eminent individuals, well regarded for their contribution to development of Indian capital markets. The Advisory Committee will collectively act as an ombudsman for InGovern and the announcement for this committee is expected by the end of January.

Feathers in the cap

Ingovern were invited as lead presenter at the Bank of New York Mellon Annual Depository Receipt Issuers conference, November 2011.

In their first year of operations itself, Ingovern has recruitment from the likes of IIM-Ahmedabad.

With help of friends at Tarento Technologies, Ingovern developed a world class technology platform called “Corporate Governance platform” that enables clients to track shareholder meetings, access research & events and has other very rich functionality.

Other players

Globally, Glass, Lewis & Co and RiskMetrics ISS are two of the biggest proxy advisory firms. Closer back home, IIAS or Institutional Investors Advisors Service started by Anil Singhvi in August 2011 also provide similar services.

More about Ingovern here and leave any questions you have in the comments section below.

- Jubin Mehta