| STOCKHOLM, March 23
STOCKHOLM, March 23 Such is the weight of
Christer Gardell's voice in Europe that Volvo's share price
jumped 4 percent one day in January when a Swedish business
daily ran a front-page story on the activist investor calling on
the truckmaker to "start delivering".
Gardell, once called a capitalist "butcher" by Swedish
media, has emerged more than a decade after co-founding Cevian
Capital - now a $12 billion activist fund - as Europe's biggest
activist investor and one of its most influential.
Having established increasing influence in the Nordics -
Cevian said this week it had nearly doubled its stake in Volvo
over a six-month period - he is now trying to
strengthen its presence in Germany.
Gardell's knack for spotting value in struggling companies
and his ability to implement strategic change - whether by
management shake-up or asset sales - has helped him chalk up
many successes in the Nordics.
Its second fund, which launched in 2006, has returned around
180 percent since inception, beating the MSCI Europe Index,
which has returned 36 percent in the same period. Figures from
research firm Evestment show Cevian is among the 15 largest
hedge funds in Europe and 30 largest in the world.
Cevian invests in stable industries and overlooked companies
that it can repair and sell at a premium - preferably double
within three to five years. It keeps a portfolio of 12 core
holdings, including big European blue-chips such as Volvo,
British security firm G4S and German conglomerate
"We like companies which have strong market positions and
solid cash flow," Gardell told Reuters in an interview in his
Stockholm headquarters, surrounded by tennis memorabilia - one
of his greatest passions.
"Many of those are industrial companies in old-fashioned
industries, and they are from this perspective still very
"We don't buy shares in Nokia, Apple and Twitter, or mining
companies which are driven by raw material prices," he said.
Gardell's strong ties with U.S. activist investor Carl
Icahn, who has featured in media for nagging Apple for buybacks
and eBay for a PayPal spin-off, have added to Cevian's prestige
on the other side of the Atlantic. The two met in New York in
1998 and have remained close friends since.
Icahn invested in Cevian's first fund in 2003 and remains an
"He likes this region and finds that corporate governance is
better structured in the Nordics than in the U.S.," Gardell
Today, three out of four of Cevian's investors are in the
The 53-year-old co-founded Cevian in 2002 with Lars Förberg,
who is based in Zurich, but Gardell is its public face.
"He is the business community's George Clooney. He has the
looks, and is world class with the media. The media has used
him, and he's used the media," said Claes Ekstrom, a partner at
Swedish private equity firm Altor, who has known Gardell for 30
years after they started their careers together at McKinsey &
Company in Stockholm.
IN THE COLD IN GERMANY?
With the most obvious Nordic restructuring cases already
completed, from retail to mining equipment, Gardell watchers
believe Cevian is reaching for similar success in Germany.
German-speaking Europe, Britain and the Nordics are the
three areas in which the fund is considering investment
opportunities, probably in that order, Gardell says.
Forberg says half the Cevian team speaks German and it is
probably the market where the firm spends most of its time.
This month, Cevian announced it had built up a 15 percent
stake in ThyssenKrupp, which has been trying to shift its focus
to higher-margin products and services. It also has a near 20
percent stake in German construction firm Bilfinger.
Some say Gardell may face a tougher battle for influence in
Germany, where corporate governance is not as investor friendly.
Boards of directors at Nordic companies are chosen by a
nomination committee made up of usually the largest two or three
shareholders. In Germany, like many other parts of the world,
they are chosen by the boards themselves.
Cevian, which sits on about half of the boards of the
companies it owns, has used the Nordic system to its advantage,
taking seats on nomination committees and gaining quick
strategic influence. The Nordic system also makes it relatively
easy for Cevian to switch out underperforming board members.
Supervisory boards in Germany tend to be more detached from
the business, with management doing most of the steering,
meaning influence is not as direct as in Sweden.
Förberg said there was no problem gaining board positions in
Germany as Cevian is seen as a key shareholder. It had a board
position in crane group Dmag Cranes and has one in Bilfinger.
"There were no complications, no issues, just a natural
expectation that we would join the boards, and we did," he told
Cevian says it is a strong believer in the strength of the
Swedish model - the nomination committee approach in particular
- and is lobbying for change in both Germany and Britain.
But it may take time. It does not yet have a seat on
Thyssen's board, though it has expressed its interest in one.
"Germany is made up of tightly knit networks," said Gunnar
Hesse, a professional board expert based in Sweden. "Consensus
is a major Swedish thing. Owners in Germany are more arrogant,
and if they are the major shareholder, they tend to ignore the
It won't be the first time Gardell has been kept out of the
financial elite's inner circle.
When he started investing, the Stockholm scene was dominated
by a handful of wealthy families - the Wallenbergs in banking,
the Stenbecks in media and telecommunications and the Perssons
in retail with Hennes & Mauritz.
In 2004, he took over as chairman of fashion retailer
Lindex. He changed the entire management team, recruited a new
CEO - a top manager from H&M - and more than doubled margins to
over 10 percent. Margins at another early investment, debt
collector Intrum Justitia, also nearly doubled.
Altor's Ekstrom says Gardell doesn't need to get invited to
the best parties, and he takes criticism well.
"He's the Teflon kid. Nothing sticks on Christer," he said.
He thinks out of the box, too. In 2012, the sports fanatic
launched one of Sweden's first low-carb beers, Solsidan, named
after his own neighbourhood, after seeing tennis players in
Australia drinking such beverages to stay trim.
Some of his strategies have taken longer to implement.
In Finland, Gardell finally convinced the main owners in
Finnish engineering firm Metso Oyj - Finnish state
investment arm Solidium and Finnish pension funds - to spin off
its pulp, paper and power unit at the start of 2014 after
pushing the plan when he first got a seat in 2006.
NOSE FOR VALUE
More recently, when most were cool to Baltic-exposed Swedish
bank Swedbank, Cevian grabbed a stake, an investment
that outperformed other European banks by over half.
After leaving Swedbank, Cevian bought into Denmark's biggest
lender, Danske Bank, which got a new CEO last year
after struggling to recover from the financial crisis. Media
speculated that Cevian, its second-biggest owner after AP
Moeller Maersk, was behind the change. Cevian would
not comment on the matter.
"You really have to take your hat off to him," said Henrik
Didner, who founded Swedish fund management firm Didner & Gerge,
the fifth biggest investor in Danske. "He has a sense for the
market. He has a good nose for value in a company."
But for all its successes, Cevian, which employs 40 people
in Stockholm, Zurich and London, has not had a perfect run.
Volvo dragged on its overall fund performance such that
Cevian was just in line with European markets last year.
Carl Rosen, CEO of the Swedish Shareholders' Association,
believes Cevian, which has owned Volvo for eight years, missed
its best chance to offload the company and says Gardell is
unrealistic about its future prospects.
"He is talking about having the same kind of profits that
you have in (Swedish truckmaker) Scania, and that is like
comparing Toyota - a global company with low margins - with
Porsche, which is a very specialised manufacturer that can have
very high profits."
Cevian has perhaps more patience than it did in its early
days. Unlike most hedge funds, it does not short stocks or use
leverage and requires 80 percent of its investors to lock their
money in for three or five years at a time.
This year, Gardell said the focus would be on bringing out
the potential of many of its companies.
"This is because we believe the conditions to implement some
things have improved," he said.
Already, Volvo's share price has risen nearly 20 percent
since the start of this year.
(Additional reporting by Johannes Hellstrom, Jussi Rosendahl in
Helsinki; Editing by Alistair Scrutton and Will Waterman)