Aviva PLC (LON:AV.) new shareholder Cevian Capital said it’s a long-term shareholder that takes a “construcivist” approach to its investments.
In a letter to the Times, senior partner Harlan Zimmerman said the Anglo-Swedish hedge fund’s approach was "far better than an opportunistic takeover" move as it allows companies to improve “themselves and their valuations”.
“With foreign strategic buyers eyeing up cheap UK targets and private equity funds sitting on record amounts of available capital, many challenged or underperforming UK companies may exit the market entirely,” he added.
“Unlike private equity, we do not take companies private, where we could realise 100 per cent of the value creation ourselves.
“We do not short or hedge, so incentives are clear and aligned with other shareholders and our companies at large.
“We invest with multi-year horizons (since it takes years to truly improve companies), and we buy large stakes in only 10 to 15 companies at a time, to focus resources and efforts.”
Cevian announced it had taken a near 5% stake in the life and pensions group earlier this month, which was followed by a list of its expectations.
These include a £5bn return of capital, £500mln of cost savings (against a company target of £300mln), doubling the dividend to 45p and a share price of £8 within three years. Currently, the shares trade at 413.6p.
Cevian said when it took its stake that it was supportive of the strategy of chief executive Amanda Blanc, which has overseen the sale of eight business for £7.5bn, but commentators have suggested that today’s letter suggests a push for a seat on the insurer’s board.
The group is one of the largest activist investors in Europe with €16bn under management and has targeted UK insurers before.
It was involved in a shake-up at Old Mutual between 2008 and 2014 and recently backed the splitting up/ taking over of RSA.