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Cevian Capital Sells Stake in Aviva After Three-Year Involvement, Acknowledging Transformation

DEF 14 Inc. May 25, 2023

Cevian Capital, an activist investor, has recently divested almost all of its holdings in Aviva, the insurance giant, marking the end of its three-year involvement with the company. The hedge fund sold its stake in Aviva, reducing it to 60,000 shares on Wednesday. This move comes after Cevian had built up a significant holding of 150 million shares, representing 6.5% of the company, at its peak in October last year.

In 2020, Cevian initially acquired a stake in Aviva and subsequently exerted significant pressure on the company and its CEO, Amanda Blanc. Cevian demanded that the insurer enhance its returns to investors to exceed £5 billion.

Aviva successfully achieved this ambitious target earlier this year and announced additional measures during its full-year results in March. These included a £300 million share buyback program, an increased final dividend payout, and an upgraded dividend outlook.

Cevian had already reduced its stake to slightly below 5% in February. Regarding its most recent stake sale, Cevian reportedly praised Aviva for transforming from a poorly performing conglomerate to a focused and well-performing insurance company.

Aviva's first-quarter update revealed a notable 11% surge in general insurance premiums, totaling £2.4 billion. The company also affirmed its progress in meeting its goal of cutting costs by £750 million by 2024.

However, despite these positive developments, Aviva's shares experienced a 6% decline in response to what the market perceived as mixed results. Notably, Aviva's net flows into its wealth division declined by 15% year-on-year to £2.3 billion.

In another statement, Cevian Capital acknowledged Aviva's recent progress and expressed confidence in the company's management team led by Amanda Blanc. Although Aviva's quarterly trading figures were deemed mixed, Cevian commended Blanc and her team for their excellent job in improving the company's fortunes.

Since Cevian revealed its stake in Aviva in 2021, the insurer has paid out over £5 billion to its shareholders. Niko Pakalén, a partner at Cevian Capital, stated that Aviva had undergone a transformation from a poorly-performing conglomerate to a focused and well-performing insurance company. Pakalén highlighted the strong shareholder returns and substantial distributions of excess capital that Aviva had achieved.

Despite the positive sentiments expressed by Cevian, the market did not fully reflect the company's continued success in Aviva's share price. Nevertheless, Aviva remains well positioned for further growth and prosperity.

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