UPDATE 1-Activist fund becomes Danske Bank's 2nd biggest investor

Thu Mar 7, 2013 11:35am GMT

Quotes

   

* Cevian raises stake in Danske to over 9 pct

* Declines comment on plans for the bank

* Shares rise 1.3 pct

By Johannes Hellstrom and Ole Mikkelsen

COPENHAGEN, March 7 (Reuters) - Activist investor Cevian Capital has raised its stake in Denmank's Danske Bank A/S in what could be a prelude to becoming more directly involved in the bank's recovery programme.

Sweden-based Cevian said on Thursday it had raised its stake to just over 9 percent, becoming the second-biggest shareholder in the bank which is recovering from a deep crisis.

Danske, Denmark's biggest bank, said in February it had reached a turning point after posting a nearly four-fold rise in quarterly pretax profit.

Cevian on its wesite describes its strategy as to invest in companies where there is a "meaningful opportunity to enhance ... long-term value by improving corporate governance, operational performance, corporate strategy and structure."

Its recent track record includes supporting a restructuring at British industrial materials group Cookson Plc, which said in November it would split into two companies in a bid to boost shareholder returns.

Cevian said it had raised its stake when Danish philanthropic association Realdania reduced its holding, putting 52 million Danske shares, or around 5 percent of the total, on the market.

Cevian managing partner Lars Forberg, set to take a seat on Danske's board later in March, declined to give any further comment about Cevian's plans for the bank.

SOMETHING IN RETURN

One analyst said it showed Cevian's confidence in Danske's recovery.

"It illustrates even more clearly that they are serious, that they believe in the Danske Bank case," senior equity analyst Christian Hede at Jyske Bank said. "They have invested in the expectation of getting something in return. It's good news for the other shareholders."

Cevian is the second-biggest shareholder behind Maersk Group , which as of March 6 owned 22.8 percent.

Danske has not paid dividends since 2007, having been stung by bad debts from a burst property bubble and writedowns on loans to struggling farmers. It has lately raised 7.15 billion Danish crowns ($1.3 billion)in new capital and laid off staff to help turn its business around.

Cevian is also a shareholder in truck maker Volvo and Finnish group Metso, as well as German industrial services company Bilfinger and insurance group Old Mutual.. It says on its website that it has more than 6 billion euros under management.

Shares in Danske were up 1.3 percent to 107.5 crowns by 1035 GMT, outperforming both Copenhagen's main index, down 0.4 percent, and the S&P European bank index, up 0.5 percent.

The stock is still lower than before Realdania announced the sale, when it stood at 111.3 crowns, but it is well up on a low of 61.15 crowns set in late 2011.

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