LONDON (Dow Jones)--Cevian Capital, the Nordic activist hedge fund headed by Christer Gardell and backed in part by U.S. investor Carl Icahn, is seeking a board seat at South African insurer Old Mutual PLC (OML.LN), a person familiar with the situation told Dow Jones Newswires on Friday.
Once part of the board, Cevian will try to persuade Old Mutual's management to sell several of its non-insurance business units, including some of its operations in South Africa, the U.S. and Sweden.
"Proceeds from the divestitures should go to a massive redistribution of capital to shareholders through a buyback," the person said.
He said that following the unit sales and buyback, Old Mutual "should form a global giant long-term savings (including insurance) company - this would be a very attractive business strategy."
Cevian will own a 1% stake in Old Mutual, once Old Mutual's purchase of Swedish insurer Foersaekrings AB Skandia (SDIA-SEK.SK) is complete. Old Mutual is paying for Skandia in part with its own shares, so some of Skandia's large shareholders will become large holders of Old Mutual stock.
Other shareholders that will together account for about 10% of Old Mutual's ownership after the Skandia deal is complete - sometime during the first quarter - are supportive of Cevian's plans, the person familiar with the matter said.
Among them are Fidelity and Burdaras HF (BURD.IC), he said. Both declined to comment.
"I think a combination of Old Mutual and Cevian in management would be very positive - both Jim Sutcliffe (Old Mutual's chief executive) and Christer Gardell are brilliant," an Old Mutual investor said.
Icahn and Gardell teamed up to build a stake in Skandia last year, and also have worked together in building a stake in Finnish engineering conglomerate Metso Corp.
Once Old Mutual finishes the purchase of Skandia, it will own a Swedish bank, in addition to Skandia's insurance businesses in several European countries. Old Mutual's larger South Africa holdings are in Mutual and Federal Insurance Co. (MAF.JO) and Nedbank Group Ltd. (NED.JO). In the U.S., Old Mutual's businesses are largely asset management and insurance.
Old Mutual declined to comment. A representative from Cevian in Stockholm declined to comment.
-By Sarah Spikes, Dow Jones Newswires; +44-207-842-9294; email@example.com