Hedge fund Toms Capital Investment Management is escalating its activist campaign at Voya Financial, seeking to take its call for a strategic review directly to shareholders and pushing for the asset manager to consider a potential sale, according to a report by the Wall Street Journal.
TCIM, which owns about 4.5% of Voya and manages roughly $3.8bn, plans to file proxy materials calling for a vote of no confidence in the company’s management and board, according to a letter the hedge fund intends to send to shareholders.
The move marks a significant escalation after months of private discussions failed to persuade Voya to formally examine strategic alternatives, including a potential sale of the company.
Voya has a market value of around $9bn. Its shares have gained more than 30% over the past year, helped in part by speculation that the company could become a takeover target as consolidation accelerates across the asset-management industry.
TCIM first went public with its campaign in June, disclosing its stake and urging Voya’s board to launch a formal strategic review and engage with potential buyers.
The hedge fund now argues that the company needs to move more decisively, particularly over its stop-loss insurance business, which provides protection to self-insured employers against unusually high employee healthcare claims.
According to TCIM, Voya’s retirement and investment-management operations are attractive franchises, but the company’s continued commitment to its stop-loss business has contributed to a valuation discount relative to peers.
The activist investor wants Voya to abandon efforts to turn around the stop-loss operation and instead explore strategic alternatives for the business, including a potential sale of the entire company.
Voya Chief Executive Heather Lavallee said during the company’s earnings call that management would continue to focus on the long-term interests of shareholders and improving the performance of the stop-loss business.
Potential buyers for Voya as a whole, or for its stop-loss operation, could include Empower, owned by Great-West Lifeco, Principal Financial and Sun Life, according to a Raymond James analysis.
TCIM’s campaign is notable because the firm has historically preferred private engagement over public activist battles. The Voya campaign is its first formal public statement on one of its investments.
The hedge fund, co-founded by Ben Pass, has built positions in several major US companies, including Target, Kellanova, CSX and Kenvue.
For shareholders, the campaign puts further focus on whether Voya’s current structure is capable of generating sufficient value independently or whether its retirement and asset-management businesses would command a higher valuation under a different ownership structure.
The planned shareholder vote could therefore become an important test of investor support for TCIM’s argument that Voya should pursue a sale rather than continue investing in underperforming parts of its insurance operations.
