Cevian Capital's €1.2 Billion Investment In UBS Signals High Expectations

Activist investor Cevian Capital targets UBS for growth, investing €1.2 billion with a vision to double its valuation.

What is UBS's potential for growth in wealth management?

Cevian Capital, a prominent activist investor, has recently acquired a significant €1.2 billion stake in UBS. This investment is grounded in the belief that UBS can potentially double its value in the coming years, aligning closer to its American counterpart, Morgan Stanley.

Strategic Investment By Cevian Capital

Cevian Capital, known as Europe's largest dedicated activist investor, has allocated nearly a tenth of its total portfolio to UBS shares. This move positions Cevian as a top-10 investor in the Swiss bank. The investment was made after Cevian's involvement in the rescue of Credit Suisse in March. Lars Förberg, co-founder of Cevian, expressed confidence in UBS's potential, noting its current undervaluation compared to global wealth management leaders like Morgan Stanley.

UBS Registers First Loss In Six Years Amid Credit Suisse Acquisition
UBS records a $785 million loss due to costs incurred from the Credit Suisse acquisition, marking its first quarterly loss since 2017 amidst a strategic wealth management expansion.

Cevian's Approach To UBS

Cevian's strategy differs from more aggressive US activist investors, as it prefers to work collaboratively with portfolio companies without seeking board representation. The firm supports UBS's current leadership, including Chair Colm Kelleher and CEO Sergio Ermotti. UBS's shares have seen a significant rise, almost 50% since the acquisition of Credit Suisse, indicating positive market reception to the bank's recent strategies.

Comparative Valuation And Market Position

UBS, despite being one of Europe's most valuable banks, lags behind Wall Street counterparts in valuation. Trading at approximately 1.2 times its tangible book value, it trails Morgan Stanley's valuation, which is about two times. Both banks have substantial wealth management operations, yet UBS's valuation suggests room for growth.

Cevian's Track Record And Future Prospects

Cevian's history in the banking sector includes varied engagements with European banks such as Danske Bank, Swedbank, and a current position in Nordea. The firm's long-term tracking of UBS, spanning about 15 years, and a near-miss with Credit Suisse indicate a calculated approach to investment. Cevian's vision for UBS focuses on enhancing its wealth management sector, especially in the US, to match the success of Morgan Stanley. The strategy suggests a shift in perception of UBS, viewing it more as a wealth manager with banking operations.

Other major investment groups like Fidelity and Capital Group have also increased their stakes in UBS, further validating the bank's potential for growth. UBS has not commented on these developments, but the increased interest from renowned investors points to a promising future for the Swiss lender.


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