Toms Capital escalates Voya campaign

Hedge fund Toms Capital Investment Management (TCIM) is intensifying its activist campaign against Voya Financial, according to the Wall Street Journal. TCIM, which holds about 4.5% of Voya and oversees approximately $3.8 billion in assets, intends to file proxy materials requesting a vote of no confidence in the company's management and board.

This significant escalation comes after months of private negotiations failed to convince Voya to evaluate strategic alternatives, such as a potential sale. Voya, valued at around $9 billion, has seen its shares rise more than 30% in the past year, primarily due to speculation about the company becoming a takeover target amid consolidation in the asset-management industry.

TCIM's activism began in June when the hedge fund disclosed its stake and urged Voya's board to initiate a strategic review and engage with potential buyers. The firm now contends that Voya should expedite decisions, particularly regarding its stop-loss insurance business, which safeguards self-insured employers from excessive healthcare claims.

TCIM argues that while Voya's retirement and investment management divisions are attractive, its commitment to the stop-loss business has resulted in a valuation discount compared to peers. The activist investor wants Voya to dismiss efforts to revitalize the stop-loss operation and instead explore strategic alternatives, including a potential sale of the entire company.

Voya's Chief Executive Heather Lavallee stated during the company's earnings call that management would prioritize shareholders' long-term interests and enhance the stop-loss business's performance. Potential purchasers for Voya as a whole or its stop-loss operation may include Empower, owned by Great-West Lifeco, Principal Financial, and Sun Life, based on a Raymond James analysis.

TCIM's campaign is noteworthy as the firm typically prefers private engagement over public battles. This marks TCIM's first formal public statement on an investment, with the hedge fund co-founded by Ben Pass having built positions in several major US companies, including Target, Kellanova, CSX, and Kenvue. The shareholder vote campaign could serve as a critical test of investor support for TCIM's argument that Voya should pursue a sale instead of continuing to invest in underperforming parts of its insurance operations.