Insurance company Voya Financial Inc. is facing increased pressure from activist investor Toms Capital Investment Management to take M&A action and make changes.
Toms Capital said in a letter to Voya’s board Monday that Voya should explore options, including a sale of the company, and engage with interested buyers.
“As a high-quality franchise trading at a historically anomalous and self-inflicted discount, Voya is at an inflection point — one that this management team can no longer be trusted to navigate,” Toms Capital co-founder and Chief Investment Officer Benjamin Pass and principal Akash Bagaria wrote in the letter, which was reviewed by Bloomberg News. “The board’s continued inaction has become part of the problem.”
The activist investor added that it believes multiple asset managers that would be logical buyers “signaled active M&A appetite and described their target profile in terms that map closely to Voya.”
“We hope to see Voya finally get the value it deserves,” Pass and Bagaria wrote.
A representative for Voya didn’t immediately respond to a request for comment.
Bloomberg News reported in April that Toms Capital had built a stake in Voya and was pushing for changes. The Voya campaign is a high-profile effort by Toms Capital, which tends to work behind the scenes and doesn’t usually write public letters.
Shares of Voya have gained 22% over the past year, giving the company a market value of $7.36 billion.
Toms Capital said in the letter that it still believes Voya to be a strong, but undervalued, company in financial services that is trading at a discount compared with its peers. The investor said Voya’s retirement and investment management segments have been performing well, having grown net assets and outperformed peers. Voya’s acquisition of benefits administrator Benefitfocus, though, was “ill-fated,” according to the letter.
New York-based Voya, which provides retirement planning, insurance and workplace benefits, reported a 23% year-over-year increase in net income to $165 million for the quarter ended March 31.
The letter to Voya comes amid a pickup in activist investor activity in asset management, which has been under pressure for years to consolidate against the backdrop of the rise of index funds.
Nelson Peltz’s Trian Fund Management paid about $8 billion, or $52 a share, for asset manager Janus Henderson Group Plc in March after a bidding war from rival Victory Capital Holdings.
Earlier this year, investment firm Nuveen paid £9.9 billion ($13.3billion) for asset manager Schroders Plc, creating one of the world’s largest active asset managers with almost $2.5 trillion of assets.
Last year, New York-based Toms Capital pushed for strategic changes at Tylenol producer Kenvue Inc. It has also built a stake in Target Corp. Reuters reported last week that Toms has an investment in spice maker McCormick & Co.
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