The activist and the raider

How serious is Christer Gardell about forcing Nordic companies to deliver better returns?

How serious is Christer Gardell about forcing Nordic companies to deliver better returns? The activist investor’s Stockholm-based Amaranth Capital fund has acquired a famous (or notorious) ally: U.S. corporate raider Carl Icahn, who has sunk E50 million ($60 million) into the E320 million fund.

Icahn “has huge financial resources to commit to this, and we have other investors -- among them, a variety of hedge funds -- with a huge appetite as well,” says Gardell, 43. “That means we can take on every Nordic company apart from Ericsson, Nokia and the big banks.” Two of those big banks -- Sweden’s Nordea and Handelsbanken -- have themselves invested in Amaranth, making the possibility of a confrontation with Gardell even more remote.

The onetime McKinsey partner says his fund is prepared to take controlling stakes and “fire entire boards if necessary” to force shareholder-friendly changes upon recalcitrant companies.

Last June, Amaranth bought 10.4 percent of one of Sweden’s largest clothing retailers, Lindex, for E28.9 million; since then Gardell has gotten the company’s executives to slash costs and distribute E200 million in cash to investors. The stock has risen 22.2 percent, to 220 Swedish kronor ($29) per share, since the fund bought it, earning a profit of E6.4 million for Gardell.

He developed his activist streak at Custos, a Stockholm investment firm that he ran for five years after a decade at McKinsey. His biggest investments -- out of a E545 million pot -- were concentrated in just 13 Swedish companies; most wound up cutting costs and making management changes, spin-offs and/or acquisitions. Gardell says that during his tenure, from 1996 to 2001, Custos produced an average annual return of 48 percent.

Gardell has grand ambitions for nine-month-old Amaranth (whose name comes from a mythical Greek flower that never fades). “If we get our activist approach right in Nordic countries,” he says, “we’ll move on to the rest of Europe in four or five years.”