NEW YORK/LONDON: Activist hedge funds have launched more non-U.S. campaigns this year than any year since the financial crisis, as managers slowly expand overseas in the face of a more challenging market at home. Companies in Europe and Japan are attractive targets for U.S. shareholder activists seeking higher investment returns and less competition among funds that have shaken up the U.S. corporate sector. That could mean big changes for boardrooms in London, Tokyo and other major markets as cash-rich activists push for management shakeups, acquisitions and disposals to boost share prices. Since the start of the year, activists targeted 131 companies outside the United States, a 47 percent increase from 2014, according to Activist Insight, an industry media and data firm. Non-U.S. activism by the top U.S. activist funds is on pace for the most campaigns this year since 2008. Fourteen such campaigns were launched since January, data from FactSet Shark Repellent show – three less than a post-crisis record set in 2013. “With U.S. valuations in general 25 percent higher than those in Japan or Europe, it was only a matter of time until Europe came into focus,” said Neil Dwane, chief investment officer at Frankfurt-based Allianz Global Investors. Dwane said the European corporate sector has yet to recover from the financial crisis. “The sector has a lot of ‘self-help’ earnings potential across most of its industries,” Dwane said, adding that the only exception was the pharmaceuticals industry and the consumer staples sector. U.S. activist ValueAct reported a 5.44 percent holding in engine maker Rolls-Royce in July. The influential San Francisco-based activist, which has invested in Microsoft and American Express, is now Rolls Royce’s largest shareholder, and according to media reports, is also investing in British engineering group, Smiths. Activist advisors interviewed by Reuters say lower valuations and the U.K. corporate governance code make it an enticing target for activists. UK industrial companies worth more than $500 million – as one example – have on average, a pre-tax return on equity of 0.19 percent, Thomson Reuters data show, compared with 0.23 percent for the U.S. sector. The UK corporate governance code is also more shareholder friendly than the U.S. version, both in terms of disclosure requirements and the ability to nominate board directors, the advisors say. U.S. EXPORT The amount that U.S. activists spend on foreign campaigns is still a tiny fraction of what they allocate domestically. But corporate targets in the U.K., Japan and Canada are increasingly in the cross-hairs. Elliot Associates took on U.K. financial services group Alliance Trust earlier this year, and Third Point just bought a nearly $1 billion stake in Japan’s Suzuki Motor Corp.. “If you look beyond Europe, Japan’s corporate governance rules are likely to change, which is one of the mandates of the Abenomics agenda. We expect to see more activist activity there,” said Ajay Khorana, Global Co-Head of Citi’s Financial Strategy and Solutions Group. Activist assets reached $129.7 billion in the second quarter of 2015, a 177 percent increase from 2010, J.P. Morgan said in a research note last month, citing Hedge Fund Research. That increase tracked a surge of campaigns and index-beating investment returns for activists. But this year, U.S. returns have taken a hit, which may add to the incentive of going farther afield: since launching in April, the S&P Activist Interest Index has a negative 14.67 percent annual return.