Elliott Releases Presentation on Sampo
Elliott Advisors (UK) Limited (“Elliott” or “we”), which advises funds that as at the date of this release collectively hold investments equivalent to more than 3% of the share capital of Sampo Oyj (“Sampo” or the “Company”), today published a new presentation outlining a clear pathway to transform Sampo into a pure-play insurer and create in excess of EUR 8 billion of value.
Whilst Sampo’s announcement of 10 November 2020 was a positive first step towards making the structural simplifications necessary to re-establish the Company’s reputation among investors, Sampo’s shares have continued to underperform. Today, Sampo’s high quality core insurance business trades at an unmerited ~5x P/E discount to its peers; this sits in stark contrast to the ~4x P/E premium the business used to trade at several years ago.
Elliott believes that Sampo’s upcoming Capital Markets Day (“CMD”) on 24 February 2021 is the opportune moment for the Company to reverse this historical underperformance and value destruction, highlight its strengths and restore investor confidence. As such, Elliott encourages Sampo to:
- Simplify the Portfolio: Sampo should announce that it plans to become a pure-play insurer by Q4 2021. The Company’s Nordea stake is widely acknowledged to have become a significant distraction and a sustained drag on valuation for Sampo. In a survey of investors commissioned by Elliott, the vast majority of respondents indicated they would like to see a full exit from the Nordea stake within the next twelve months. Sampo is positioned to satisfy investor demands by distributing half of Sampo’s Nordea shares directly to shareholders – an act that over two-thirds of investors surveyed are supportive of – in Q2 2021 and selling the remainder to maintain a healthy balance sheet.
- Clarify the Strategy: Importantly, Sampo should assert that without the overhang of the Nordea stake, the Company will commit to being a dividend-focused P&C insurer, with no material M&A ambitions outside the Nordics until the Hastings deal proves successful. We believe that there is widespread confusion amongst investors about the Sampo equity story, including scepticism on the rationale for the Hastings transaction and Sampo’s future M&A appetite. What is clear is that investors are seeking greater focus on stable dividends, viewed as the lifeblood of a highly rated insurance company, and a commitment by Sampo to become a focused P&C insurer. The stability and growth prospects of IF P&C ideally position Sampo to become the stable dividend payer that investors seek; however, concerns about Sampo’s capital allocation strategy must be resolved before the market can give Sampo the credit it deserves.
- Enhance the Communications: IF P&C is Sampo’s crown jewel.Sampo should clearly and confidently articulate IF P&C’s strong fundamentals and provide the market with relevant, timely and specific targets and KPIs. Shining a spotlight on IF P&C will enable Sampo to recover its premium valuation.
Elliott believes that these measures and the transformation of Sampo into a pure-play insurer would collectively restore investor confidence and unlock in excess of EUR 8 billion in value for Sampo’s shareholders.
Elliott today launched a new website www.SimplifyingSampo.com, where Elliott’s presentation is available to view and download in full. Interested parties are encouraged to visit the website to receive additional information and to sign up for future updates.
Elliott Investment Management L.P. manages approximately $41 billion of assets. Its flagship fund, Elliott Associates, L.P., was founded in 1977, making it one of the oldest funds under continuous management. The Elliott funds’ investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, high net worth individuals and families, and employees of the firm. Elliott Advisors (UK) Limited is an affiliate of Elliott Investment Management L.P.
Elliott intends to reviews its investments in the company on a continuing basis and depending upon various factors, including without limitation, the company’s financial position and strategic direction, the outcome of any discussions with the company, overall market conditions, other investment opportunities available to Elliott Management, and the availability of company securities at prices that would make the purchase or sale of company securities desirable, Elliott may from time to time (in the open market or in private transactions, including since the inception of Elliott position) buy, sell, cover, hedge or otherwise change the form or substance of any of its investments (including company securities) to any degree in any manner permitted by law and expressly disclaims any obligation to notify others of any such changes. Elliott also reserves the right to take any actions with respect to its investments in the company as it may deem appropriate.
Sarah Rajani CFA
Elliott Advisors (UK) Limited
T: +44 (0)20 3009 1475
T: +35 850 554 1615
M: +46 709 711 213
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