Activist investor Cevian dumps its entire stake in Vodafone 

Cevian dumps its entire stake in Vodafone: Activist investor gives up on efforts to reform the telecoms giant after dismal share price run

Europe’s largest activist investor has dumped its entire stake in Vodafone in an apparent admission of defeat.

Cevian Capital had built up a large but undisclosed holding in the FTSE 100 telecoms giant in 2021, becoming one of its ten largest shareholders.

The group pushed for the company to slim down its business and sell off poorly performing divisions in an effort to turn around a dismal performance in the share price, which over the last five years has fallen by 60 per cent.

Vodafone is currently being run by its finance director Margherita Della Valle who is standing in as acting chief executive.

But Cevian seems to have given up on efforts to reform the business, with the hedge fund having now offloaded its entire stake, according to people familiar with the matter.

The decision followed news in October that the activist had reduced its holding over the summer as rising interest rates dampened prospects that Vodafone would be able to secure favourable deals.

An agreement signed in August for Vodafone to sell its Hungarian business for £1.6billion seemed not to have helped matters.

It could also signal Cevian has little faith in whoever replaces ex-boss Nick Read, who was ousted last month after just over four years in charge.

His departure has sparked furious speculation about the future direction of the business, as well as the fate of a planned merger with rival mobile network Three which if completed would create Britain’s biggest mobile supplier with more than 27m customers.

Vodafone is currently being run by its finance director Margherita Della Valle who is standing in as acting chief executive.

News of Cevian’s exit came after James Rasteh, the head of fellow activist investor Coast Capital, said that it too had sold its position in Vodafone after concluding there was no attractive model for the business.

But while activists are exiting Vodafone, other major investors are throwing their weight behind the company.

Earlier this week, the group’s largest shareholder, Emirati telecoms group e&, formerly known as Etisalat, upped its stake to 12 per cent from 11 per cent, taking the value of its holding to nearly £3billion.

E& is considered to be an ally of Vodafone’s management, given its boss Hatem Dowidar was previously head of the telecom group’s Egyptian business and chief of staff at its London office.

Karen Egan from research group Enders Analysis said e&’s public support for Read’s approach before his departure ‘probably prompted Cevian to pull out’. 

But she added that while the activist investors ‘may have given up hope’, other investors would be ‘campaigning hard for a fresh approach’ to recoup the losses in the share price.

‘The board will be under considerable pressure from all shareholders , many of whom will have lost a quarter of their money on Vodafone shares in the past year alone, to appoint a new boss with a more radical vision,’ Egan said.

Among the potential agitators is French billionaire Xavier Niel, the founder of telecoms firm Iliad, who owns a 2.5 per cent stake and has said the new head of Vodafone would need ‘a clear roadmap’ and that he was prepared to help draw up a strategy.