A United States-based entity is reportedly targeting private investors in British insurer Aviva with offers to buy their shares at a price significantly below market value, prompting a warning from the UK's investment minister.
Lord Stockwood expressed concern over the practice, which has been described as a 'scam' by industry insiders. He stated that the government would work with the Financial Conduct Authority (FCA), the city's financial regulator, to ensure investors are protected from such unsolicited offers. The FCA has faced questions from Members of Parliament regarding the activities of the U.S. firm Litani, which has allegedly approached approximately 100,000 Aviva retail investors with offers to purchase their shares for 530 pence each. This price is considerably lower than Aviva's closing share price of 657 pence on the day the news broke.
Aviva itself has issued warnings to its shareholders, many of whom received stock when the company, formerly Norwich Union, demutualized, advising them against accepting the offers. Concerns have been raised that other companies with a large historical shareholder base, such as British Gas owner Centrica and BT, could become targets for similar tactics. Former pensions minister Ros Altmann highlighted the issue in the House of Lords, referring to these as mini-tender offers designed to allow unauthorized firms to acquire shares from vulnerable investors at below-market rates.
Lord Stockwood affirmed the government's commitment to fostering a culture of retail investment and acknowledged the concern over shareholders being targeted with low-value offers. He emphasized that communications related to buying and selling shares must be fair, clear, and not misleading, and pledged continued collaboration with the FCA to monitor risks and safeguard investors. While acknowledging that under-market prices might be appropriate in scenarios with 'no liquidity' where shares are difficult to sell, he stressed the need to investigate the specific instance to ensure no wrongdoing, believing the FCA possesses the appropriate mechanisms to do so.
Separately, former Treasury minister John Glen questioned FCA chief Nikhil Rathi during a Treasury select committee hearing, noting that such mass solicitations could cause confusion among investors. Rathi responded by stating that all communications to shareholders must be fair and clear, and that the FCA would be monitoring the situation.