Rhenish capitalism meets activist hedge funds: Blockholders and the impact of impatient capital

An ownership structure dominated by blockholdings is central for ‘Rhenish’ capitalism, because it provides ‘patient capital’. Analysis of the 160 largest listed German corporations shows that blockholdings have declined and foreign investors have increased. This could enable activist hedge funds – ‘impatient capital’ demanding high returns – to have greater impact on German listed companies. In order to explore this phenomenon, three case studies have been conducted. These case studies indicate that blockholders are potentially able to shield companies against hedge funds, and that impatient capital is able to gain influence over corporations that are not protected by patient blockholders – however, the behaviour of blockholders and hedge funds is more complex than commonly theorized. On balance, these developments contribute to an increased internal diversity of Rhenish capitalism.