- Industrivärden

1944 - 2009
1944 - 2009
1944 - 2009
I N D U S T R I V Ä R D E N 65 YEARS
Since 1982 Christer Bartholdi served as group
controller for Bahco, Promotion, Inductus
and Industrivärden. In connection with his
retirement in 2009, Christer was commis­
sioned to write a book about Industrivärden’s
history since its founding in 1944, and to
provide illustrations for the book.
Documentation for the historic account
of Industrivärden is drawn from official
sources, such as annual reports, press releases
and newspaper clippings, as well as internal
material such as minutes to board meetings
and memos. Christer also interviewed the
current and former board chairmen, vice
chairmen and other senior executives as well
as current and former major owners of
Industrivärden.
I N D U S T R I V Ä R D E N 65 YEARS
From holding company to long-term active owner
Following the death of Swedish financial mogul
Ivar Kreuger in 1932, Handelsbanken had major
claims on sca and LM Ericsson, both of which
were part of Kreuger’s industrial concern. Through
a public auction, Handelsbanken acquired all
of the shares in sca. To protect its receivables
during the economic downturn in the 1930s,
Handelsbanken was forced to acquire substantial
shareholdings in several other industrial companies, including Fagersta, Reymersholm, BolinderMunktell, and most importantly, LM Ericsson.
The Banking Act at the time stipulated that
banks could only own stock to protect distressed
assets. Handelsbanken thus chose to establish a
holding company, which it called Industrivärden.
Established in 1944, Industrivärden was listed on
the stock market in 1945 in connection with the
sale of its stock to Handelsbanken’s shareholders.
Upon its formation, Industrivärden had an
equities portfolio worth sek 54 million consisting
of majority holdings in Fagersta, Hammarforsen
and Kilsund, plus sizable holdings in LM Ericsson, Reymersholm, Bergvik och Ala, and Almedahl-Dahlsjöfors. A few years later, Industrivärden
acquired a substantial stake in sca.
During the 65 years that have passed, a large
number of shareholdings have passed through
Industrivärden’s equities portfolio. Examples of
well-known companies in which Industrivärden
has been a large owner but are no longer included
in the equities portfolio include aga, plm, Bahco,
Promotion, jm, Fermenta, Thorsman, Besam and
Skandia.
Today Industrivärden is a pure holding
company whose largest shareholdings, ranked by
size, are in Handelsbanken, Sandvik, sca, ssab,
Ericsson, Volvo, Skanska and Indutrade. The
market value of the equities portfolio at year-end
2009 was sek 53,500 million.
From the time of its stock market introduction
in 1945 through 2009, Industrivärden has generated an average annual total return of 14 percent.
1944–2009
I N D U S T R I V Ä R D E N 65 YEARS
From holding company to long-term active owner
Text and illustration documentation: Christer Bartholdi
Introductory chapter: Gunnar Wetterberg
English translation: Joseph M. Brennan
4
5
Table of contents
8 Foreword
11 Gunnar Wetterberg: Industrivärden from a
socio­economic perspective
20 A brief history
26 Economic development during the 1920s and ‘30s
72 Indus Innovation established 1984
74 Equities portfolio concentrated during 1980s
76 Gullfiber split up 1986
77 Purchases of stock in Nils Dacke 1986 and 1989
78 The Fermenta affair 1986
28 Ivar Kreuger’s involvement in Tändsticksaktiebolaget,
SCA and LM Ericsson; the Kreuger crisis
80 Interview with Bo Söderberg
34 Handelsbanken major industrial owner in the 1930s
82 Restructuring of Fermenta
38 Industrivärden established 1944
83 Interview with Börje Nordenö
42 Industrivärden from the start
84 Shareholding in JM sold to Skanska 1987
47 Seemingly low level of activity during the 1950s
85 Interview with Sven Hagströmer
50 Engineering stocks complemented through acquisition of
PLM in 1960 and Bahco in 1961
87 Bid for PLM 1987
52 ITT sells its shareholding in LM Ericsson 1960
90 Interview with Lars Bertmar
54 Promotion established 1962
92 Bid for Bahco 1991
56 Major equity transactions in 1963 and 1964
94 PLM gradually restructured 1992–1994
57 John Mattsson Byggnads AB acquired 1965
96 Purchase rights in SSAB acquired 1992
58 Wifstavarf deal 1965
97 Combination of stock and CPN classes 1993
60 Collaboration between Gullhögen, Ytong and Durox
61 Building supplies company O&R acquired 1970
62 Gullhögen sold to Cementa 1973
89 Sudden CEO change 1989
98 Sale of majority shareholding in PLM 1995
99 American Ball shows interest in acquiring PLM 1995
64 Industrivärden’s investment policy 1976
100 Large shareholding in Sandvik acquired in 1997 – largest
investment decision ever made
66 Fagersta divested 1978
102 Thorsman and Fundament divested in1997 for healthy profit
68 Fastighets AB Fundament established 1981
104 AGA sold in 1999 to Germany’s Linde
70 JM introduced on stock market 1982
107 Pharmaceutical portfolio is built up and divested
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108 Investment in Skandia
Themes:
110 Interview with Clas Reuterskiöld
158 Industrivärden as long-term owner
114 Interview with Bo Rydin
160 Industrivärden as an equity investment
122 Interview with Jan Wallander
162 The eternal issue of the holding company discount
124 CPN loan canceled 2001
164 A brief history of the five largest shareholdings
125 New strategy 2002: Active ownership instead of equities
management
178 Industrivärden’s largest owners during various periods of
time
126 Besam sold in 2002 for large profit
183 Interview with Anders Wall
128 New issue by Ericsson 2002
186 Interview with Erik Penser
130 Small, unlisted holdings sold
188 Interview with Fredrik Lundberg
131 Acquisition of Icelandic company Össur 2002
192 Industrivärden’s business model
132 Short-term equity and derivative trading established
2003
198 Refinement from mixed to pure holding company
133 Munters and Höganäs new holdings
200 Tax rules for holding companies during various periods
of time
134 Indutrade listed on stock exchange 2005
202 Industrivärden’s reporting to the stock market
136 Isaberg Rapid sold 2006
204 Industrivärden’s offices as cultural bearer
137 New issue by SSAB 2007
210 Some prominent people on the board and management
138 Substantial purchases of stock in Volvo 2007
140 Equities portfolio at year-end 2009
Appendices:
141 Convertible loan issued 2010
212 List of board members and auditors
143 Interview with Anders Nyrén
212 List of Presidents and Executive Vice Presidents
149 Interview with Tom Hedelius
213 Bibliography
153 Interview with Sverker Martin-Löf
7
Foreword
during the 65 years that have passed since Industrivärden was
introduced on the stock market in 1945, Swedish society has undergone a sweeping change. Sweden’s rapid industrial transformation
is reflected in the development of Industrivärden, which today is a
completely different enterprise than the holding company that was
formed by Handelsbanken in 1944 to manage shareholdings taken
over by the bank during the 1930s as collateral for defaulted debts.
Industrivärden’s initial portfolio of stocks consisted of the companies Fagersta, L M Ericsson, Bergvik och Ala, Hammarforsen,
Almedahl, Kilsund and Regia, along with subordinated debentures
in Bolinder-Munktell, which were exchanged for stock in sca in
1950. Following the so-called Kreuger crash in the 1930s, Handelsbanken became the dominant owner of sca, which was a subsidiary
of the bank until 1950, when sca was listed on the stock market.
Of Industrivärden’s original equities portfolio, the holdings in
Ericsson and sca are the ones that remain today.
It can be noted that, over the years, Industrivärden has conducted its business with a large measure of financial creativity. Many
stock purchases have been made through issues in kind, such as the
acquisition of Promotion in 1962 and jm in 1965. The purchase of all
of the shares in plm in 1987 was financed by convertible participating notes (cpn’s), which at the time were a financial innovation.
The acquisition of Investment ab Bahco in 1992 was a lucrative
deal, leading to the eventual sale of several of Bahco’s subsidiaries,
such as Besam and Thorsman, for handsome gains. And the convertible bonds that were issued in 2010 may eventually be converted
to stock, proving that an increase in capital is possible despite the
so-called holding company discount.
In connection with Industrivärden’s formation, control of the
company was ensured through a consortium of preferential shareholders – consisting of board members and executives of Handelsbanken – who had a voting majority. This was called into question
8
by the regulatory authority at the time – the Bank Inspection Board
Office – and as a result, the preferred shares were redeemed in 1947.
After this, Industrivärden did not have any dominant owner. It was
not until the 1970s that sca acquired a large block of shares with
strong voting power, which were subsequently transferred to various
foundations related to Handelsbanken and sca.
Industrivärden’s business focus has changed a great deal over
time as a result of tax legislation. The Industrivärden of today is a
pure holding company with a limited number of large shareholdings in which Industrivärden participates in the companies’ development as an active owner. The largest holdings today are, by
order of size, Handelsbanken, Sandvik, sca, ssab, Ericsson, Volvo,
Skanska and Indutrade. However, up until 2006 Industrivärden was
a mixed holding company with a periodically very extensive, wholly
owned industrial operation. As late as the early 1990s, wholly
owned businesses – including plm, Inductus, Indutrade and Fundament – accounted for nearly half of Industrivärden’s assets.
A large number of shareholdings have passed through Industrivärden’s portfolio during the past 65 years. Some well known
companies in which Industrivärden has been a major owner but
which are no longer included in the equities portfolio include
Fagersta, Bergvik och Ala, Almedahl-Dahlsjöfors, Gullhögen,
Gunnebo, Borås Wäfveri, Gullfiber, aga, Svenska Metallverken,
Beijerinvest, plm, Bahco, Promotion, jm, Nils Dacke, Fermenta,
Thorsman, Lundbeck, Besam and Skandia.
Industrivärden’s equities portfolio in the future will likely include new shareholdings, while others will be divested. But what has
always been a distinguishing feature of Industrivärden will surely endure: long-term investment perspective, active ownership with board
members in the portfolio companies who have ties to Industrivärden,
and portfolio companies with well-defined and executed strategies,
favorable market positions and competent management.
9
This book gives an account of Industrivärden’s history since the
start. Author and historian Gunnar Wetterberg has contributed an
introductory chapter on the background to Industrivärden’s formation, from a broader socioeconomic perspective. The rest of the
book was written by retired Industrivärden and Bahco employee
Christer Bartholdi, who has striven to give a general overview of
Industrivärden’s development through a chronological narrative of
significant transactions. The book also includes numerous interviews with people who have contributed to Industrivärden’s development in their capacity as board members, senior executives, or as
representatives of major shareholders. Towards the end of the book
are a number of thematic sections, such as about Industrivärden as
a long-term owner in Swedish industry, Industrivärden as an equity
investment, and even about Industrivärden as a banner of Sweden’s
cultural heritage.
The notion that ownership can be managed by default is just as
precarious as the notion that it can be managed by politicians. A
country needs engaged owners who are prepared to take responsibility for a company’s long-term development. Industrivärden
stands out as an example of a long-term active owner which, over a
65-year period, has successfully developed its model for value creation through a well-defined ownership strategy. Long-term owners
are needed!
Enjoy your reading!
Anders Nyrén
10
Gunnar Wetterberg
Industrivärden from a socioeconomic perspective*
The emergence of commercial banks
The modernization of Sweden’s economy in the 19th
century was hampered by difficulties in mobilizing
capital. During the reign of King Gustaf iii, the State
had established so-called diskontkompanier – the first
rudimentary commercial banks – but these became
plagued by troubles when neutrality was severed at the
end of the Napoleonic Wars. In 1817 the Malmö diskont
(“bank”) failed (leaving behind one of the city’s most
beautiful buildings), and other similar banks began
closing thereafter.
As a result of these bank closures, it became difficult to finance the transformation of agriculture
following its reform and the country’s emerging forest
industry. The trading houses and private money brokers
were inadequate, and borrowing was expensive despite
a ban on exorbitant interest rates (interest was masked
as fees and commissions).
It was not until the 1830s that commercial banks
began to sprout, but it would take some time before
they would establish themselves as the dominant play-
* Gunnar Wetterberg is a Swedish historian and author. This
chapter describes the genesis of industrialism in Sweden,
drawing from material that Gunnar Wetterberg has gathered
for his book Pengarna och makten: Riksbanken’s historia (Eng.
trans.: Money and Power: A History of the Central Bank of
Sweden) (Atlantis 2009).
11
ers in the financial market. The State, however, made
its choice at an early stage: when the financial market was shaken by international crises in 1857/58 and
1878/79, the State allowed the traditional players to fail,
but kept the affected banks – Skånes Enskilda (1857)
and Stockholms Enskilda (1878) – under its wing.
But the two powers of government were pulling
in different directions. The government put its chips
behind the commercial banks, while the farmers in
Parliament – who had the other chamber in their hand
– obstructed the banks’ progress and backed Riksbanken as an alternative. It was not until the Central Bank
Act was passed in 1897 that the roles were set straight.
Riksbanken became a modern central bank with the
exclusive right to issue banknotes and discontinued its
commercial banking business.
The turbulent stock market
It took a long time before Sweden obtained a working stock market. The first, major industrial companies
had financed their expansion largely with own profits.
The growing need for capital around the turn of the
century led to a growing dependence on the banks. The
scope for establishing new banks grew larger. From
1896 to 1908, 56 new banks were established.
Following the peaceful end to the Russo-Japanese
War in 1905, the favorable international development
gained steam. In the ensuing economic boom from
1905 to 1907, prices of stocks and real estate rose, and
trading in stocks became more common among the
broader public. The Stockholm Stock Exchange had
reorganized its operations in 1901. Starting in 1907, 16
banks gained access to the bourse, in addition to the
five stockbrokers that had already become established,
and a working secondary market for securities had
thereby been established.
Stock prices rose, and many speculators borrowed
against their holdings from banks. Much of this was
driven by trading in Grängesberg shares. In 1913,
Grängesberg accounted for more than half of trading volume on the Stockholm Stock Exchange. This
keen interest was related to the company’s purchase of
a large tract of land in Lapland in 1903. During these
years, loans to buy stock accounted for 30 percent of
lending by Sweden’s commercial banks, but at Handelsbanken it accounted for more than half, and at
Stockholms Enskilda Bank even more.
Just as during the Napoleonic and Crimean Wars,
Swedish industry benefited from neutrality during the First World War. The greatest impact of the
wartime economy was on the stock exchange. With
the enactment of the 1911 Banking Act, the draconian
rules for banks’ shareholdings were relaxed out of fear
that Sweden would otherwise miss out on the type of
bank-supported investment activity that could be seen
in other countries. The banks and their managements
used their limited rights to buy shares in order to establish so-called issue companies and thereby help new
companies obtain financing. The banks’ involvement
grew considerably larger than the lawmakers had actually intended, since they supported the issue companies
with large loans, which in turn used the money to buy
stocks.
Prices were driven up by borrowed money. A
speculator could buy a block of shares for sek 10,000
and obtain financing for sek 7,500, which he would
then use to buy more shares. In 1915, stock in steamship
companies rose by 100–150 percent. The following year,
prices of “war stocks,” such as asea, Stora Kopparberg
and Stockholms Superfosfat, rose equally as much,
while other stocks posted more moderate gains. The
number of stockbrokers increased to more than 100.
The subsequent drop was great. The government’s
efforts to return to the previous gold standard only
fueled deflation after the war. Stock prices plummeted,
and more than 50 issue companies went bankrupt.
Only ab Emissionsinstitutet and Investor survived.
The collapse sent a chill through the financial
markets. To alleviate the banks’ situation and ease the
pressure to sell on the stock exchange, a few leading
bankers took a remarkable initiative. In autumn 1919,
some 100 people formed the company Moneta u p a,
which bought large blocks of stock in Gränges, Stora
Kopparberg, skf and other companies, to prevent
prices from being pushed down even further. It was
not until 1929 that the company was dissolved, without
having made any actual profit during the interim
period. Meanwhile, the State formed Kreditkassan in
1922 to support distressed banks.
As a result of this crisis in the early 1920s, many
capital owners went broke. The Swedish business
magazine Affärsvärlden summarized the situation at
the end of 1923: “As a result of the depressed stock
market, the capitalists from 1913 have become more
decimated than the proudest cavalry regiment that ever
rode to attack against a dozen well-aimed machine
guns.” The dreams and fate of small investors is compellingly portrayed in Birger Sjöberg’s novel Kvartetten
som sprängdes.
But the market bounced back. Ivar Kreuger infused
the optimism of America in the 1920s into the Swedish
markets. He began with matches and bond issues, and
organized international capital transfers that would
become a sort of Marshall plan for the period between
the two world wars. He then turned his attention
to the Swedish stock market. Much to the relief of
Moneta’s shareholders, Kreuger was interested in some
of their shareholdings. He made his most constructive
undertakings when be embarked upon a restructuring
12
of the Swedish forest industry through sca and by
investing in the new mines in Boliden.
Kreuger’s suicide in Paris showed that his empire
was built on loose sand. Kreuger had manipulated the
books, using the proceeds from new securities to pay
dividends on existing ones. Despite an abundance of
warning signs (the Bank Inspection Board Office had
remarked on his questionable borrowing as early as
1922), Sweden’s commercial banks – headed by Skandinavbanken and Handelsbanken – had nevertheless
become deeply entrenched in his business, not least
with the former Moneta holdings as security. Now the
collateral fell back on the banks’ lap at the same time
that stock prices plummeted. They reached their low
point in 1932. Not until 1949/50 would stock prices
return to the highs they had reached in 1928, and not
until the end of the 1950s in constant prices.
Industrivärden established
The Second World War was unlike the first. The State
had learned its lesson. Spearheaded by Wigforss and
Dag Hammarskjöld, the government and Swedish
Central Bank (Riksbanken) coordinated their finance
and monetary policies, along with funding issues in
general. Once again, Swedish industry benefited from
the country’s neutrality, but without the sharp fluctuations in monetary values that were prevalent during the
First World War.
At the same time, Swedish industry stood strong.
The innovative companies formed around the turn of
the century had captured market shares when the First
World War had kept a stranglehold on their competitors. They consolidated during the 1920s, and Sweden
had weathered the crises during the 1930s better than
most other countries. Although Swedish companies
were well equipped to meet the easing in demand
during the post-war era, they were undervalued on the
stock exchange.
This was a problem for the banks, which had to
take over large shareholdings following the Kreuger
13
collapse. The bank laws required that they liquidate
their holdings as soon as possible, but who would want
to let go of an undervalued golden egg? This was a key
reason behind the formation of the holding companies.
Stockholms Enskilda Bank had had Investor since
1916, Skandinavbanken established Custos in 1937, and
Industrivärden was established in 1944 to take care
of potentially profitable shareholdings that had been
seized as collateral by Handelsbanken.
The establishment of holding companies with close
ties to the banks had an important side effect. During the 1930s, the corporate tax code was overhauled.
Established companies were given favorable terms for
depreciation and self-financing. Following the First
World War, the growing but indebted companies were
strongly dependent on the banks, but after the Second
World War, they managed considerably better on their
own. Already by the end of the 1930s they had become
net depositors in the banks. The holding companies became an instrument for the major commercial banks to
retain key customers within their spheres of influence.
The record years
The successful economic policies during the Second World War led to hubris. In a publication titled
“High taxes – low interest rates” written in honor of
Eli Heckscher in 1944, Gunnar Myrdal argued for an
entirely new interest rate policy. After the war, there
would be many reasons to keep interest rates down.
At the heart of the matter was the function of interest
rates as a means of steering investment, but wouldn’t it
be better to use taxes? That was the path chosen by the
State. Post-war regulation was expanded to keep interest rates low and steer the flow of capital.
Sweden’s domestic regulation existed under the
protection of the Bretton Woods system. This new
international system was based on the dollar as the
reserve currency, fixed exchange rates and stipulations requiring consultations before a member state
could adjust its exchange rate. The limited capital
flows gave the member states some room to maneuver with respect to monetary policy, even though the
fixed exchange rates entailed that international price
movements put pressure on domestic economies. At
the same time, the new international institutions were
working to deregulate trade, which facilitated Swedish
companies’ export efforts.
Under the tax rules at the time, existing companies
could finance their own investments at favorable terms,
while restrictions prevented the emergence of new
companies. Although the 1950s and ’60s are often regarded as successful decades with respect to economics
and stabilization policies in particular, it can be argued
that the system of credit controls at the time contributed to industrial stagnation and weak development of
new companies in the decades that followed.
On the other hand, the effects of this were offset
by the market’s circumventing of the regulations. By
the 1950s, a gray financial market had begun to emerge.
Farmers gained scope by putting off debt repayment
and interest payments, while small businesses began
taking commercial loans. An informal market emerged
beside the regulated flows when the banks’ notary
departments arranged credits between their customers. During the 1960s, the banks established finance
companies for their unregulated lending. Meanwhile,
the holding companies helped small and mediumsized enterprises obtain financing and opened the door
to the banking “spheres.”
Most expansion during these record years took
place within the established companies. It was hard for
new companies to finance their growth. The exception was the construction industry. Through regulation
and hard-handed persuasion, the state pressured the
capital market to finance a dramatic increase in housing construction. Subsidies and favorable borrowing
terms made it profitable to join in the many projects of
the so-called million program (the aim of which was
to build one million residential units in a short period
of time during the 1960s and ’70s). The construction
industry flourished. Peab was one of the few large
Swedish companies to become established during the
1960s. Industrivärden was active in the construction
sector, with holdings in jm, Harry Karlsson and Skanska, but also became deeply involved in the building
supplies industry through Olsson & Rosenlund and
the Gullhögen Group.
The wild ’70s
The Vietnam war led to a large budget deficit in the
u.s., but the central banks in other countries fought
inflation by accepting dollars in their currency reserves.
In the early 1970s the situation became untenable – the
dollar’s ties to gold were cut and the world’s currencies
began to float.
The floating currencies gave rise to a new set of
problems for the world’s economies. Inflationary
pressure rose. West Germany’s Bundesbank adopted
a strict monetary policy that led to higher unemployment, while other countries focused on job growth and
let prices rise. The problems worsened when the oil
exporting nations joined together and pushed through
sharp price increases on a couple of occasions. Contrary to the expectations of many economists and governments, unemployment rose even though inflation
was allowed to rise. Large parts of the world economy
suffered from “stagflation.”
Sweden’s central bank, Riksbanken, initially followed the same path as Bundesbank and designed an
austerity package to fight inflation. But this belttightening was strongly criticized by many. Leading
economists and the center-right parties complained
about the “reckless stop” and “the lost years.” Finance
Minister Sträng was restrained, even though he wasn’t
as concerned as Riksbanken, but his colleagues in the
government were aware of the problem, and ahead of
the election in 1973, Olof Palme loosened the belt. The
election resulted in a 175–175 split between the political blocs. Pushing for an austere finance policy would
have been a difficult undertaking, and the government
14
didn’t even try. The hope that Sweden would be able to
bridge the crisis led to a rash of government stimulus
packages.
In the next election, the center-right bloc won
a majority, and from 1976 to 1982 three center-right
governments followed in succession. The “industrial
rescue” cost billions. Budget deficits and the national
debt mounted, inflation was rampant, and the krona
was devalued.
Inflation in Sweden was periodically in the double
digits. Wage determination was centralized and contributed to stable development during the record years,
but could not withstand the inflationary pressure. The
negotiators began to compensate and then anticipate
higher prices in their demands. Inflation was fueled
by government regulation of the housing market and
agriculture. When baby boomers from the turn of
the century reached retirement age in the 1970s, this
put pressure on the municipalities’ and county councils’ finances, with a rising tax burden as a result. The
economy stagnated, and productivity lagged.
These macroeconomic problems coincided with
a crisis for many of Sweden’s heavy industries. Shipbuilding subsidies were a key factor in the growing
budget deficits, but in the long run this was to no avail.
Sweden’s steel industry encountered major difficulties,
and a restructuring was begun – for Industrivärden’s
part involving Fagersta. Industrivärden also participated in the ongoing restructuring of the forest industry
through sca.
Still, many large Swedish companies managed relatively well as the domestic market decreased in importance. Parts of the Swedish export industry benefited
from the commodities boom that followed the first
round of oil price hikes in 1973 and 1974. When the
international economy recovered faster than Sweden’s
economy, the major companies increased their focus on
exports.
15
Deregulation
When currencies began floating and fluctuating in
relation to each other, this increased the importance
of the international currency market. During the
1960s, the unregulated eurodollar market had emerged
outside the central banks’ control. In the early 1970s it
grew explosively, fueled by the opec nations’ dollar surplus. Commercial capital flows to developing
countries rose sharply – often without oversight and
for some rather dubious purposes.
Following a few incidents involving bank collapses and developing countries mired in debt, the u.s.
and the uk began to ease regulation of the financial
markets. The aim was to attract some of the eurodollar flows into the regular financial system. This would
allow greater opportunities to affect the flows and ease
the strain on the financial system.
Encouraged by Thatcher’s and Reagan’s deregulation during the 1970s and ’80s, a growing number of
countries followed suit. International payment flows
rose sharply. Under the Bretton Woods system, crossborder payments were almost always coupled to trade
or physical investments. Now, trading in securities and
currency futures skyrocketed, and international capital
flows doubled many times over.
In the early 1980s, economies and companies found
themselves in an entirely different environment, not
only because of the strongly higher capital flows. Several different factors interacted and strengthened each
other. New information technology made it possible
to carry out large and complicated transactions over
any distance. The financial markets innovated instruments and techniques for growing numbers of niches
and needs. The increased opportunities to work across
national borders encouraged companies and investors
to look across a broader horizon when they were to
decide what they would invest in and where.
In Sweden, regulation stayed intact considerably
longer than elsewhere. When the Social Democrats
retook control of the government in 1982, a “super de-
valuation” was their first action to reverse the economic
decline. Deregulation was considered only gradually at
first. In 1985 they increasingly began dismantling more
of the regulations that had controlled the capital flows,
but it would take until the end of the decade before the
currency regulations were eliminated.
The devaluation helped Swedish industry, but it
failed to cure the fundamental problems with the
economy. Inflation was still far higher than was healthy,
the tax system presented obstacles to work and savings,
and pay raises were still being sought to match higher
prices, which thereby contributed to them. During the
second half of the 1980s, overheating became a growing
problem, but neither the finance nor monetary policies
managed to address it.
To some extent, deregulation contributed to the
problems. Regulations were removed in a backward
way. While the relaxing of investment regulations for
insurance companies freed up billions, currency restrictions locked them in to the Swedish asset markets,
where they drove up prices of stocks and real estate.
The savings banks and agricultural cooperative banks
were allowed to enter into what was previously the
domain of the commercial banks, sector convergence
grayed the lines between banks and insurance companies, and new financiers became involved in deals
that they didn’t quite understand. Other players also
jumped in to this increasingly wild dance.
Deregulation made it easier for households to borrow (the tax system credited them with a large share of
their interest expenses), thereby increasing their debt.
The credit expansion that followed deregulation was
stronger than what most had expected. Consumption
rose sharply in 1986 and 1987, pared with a dramatic
decline in savings. Consumption as a share of households’ disposable income rose from roughly 96 percent
in the 1970s to 98.5 percent during the first half of the
1980s, and to 104 percent from 1987 to 1989. Measured
as a share of assets, household debt had decreased up
until the 1970s and began rising thereafter. Household
debt was 54 percent in both 1980 and 1985, but rose to
68 percent in 1988. People began borrowing more to
buy financial assets. The stock market rose sharply in
1985 and 1986, and it became common to borrow for
tax-deductible retirement savings.
This increase in capital volumes created new opportunities to do business and try bold arrangements.
Volvo’s projects with Norway, Fermenta and eventually Renault come to mind, but other companies and
business owners ventured into much more than that.
The stock market came to life after languishing for
many decades, personal investors flocked to the market
through the tax-advantaged national savings system, and
they continued their migration into pension insurance
plans and mutual funds. This spurred an interest in ipo’s.
Part of the problem in the 1980s was due to a lack
of coordination between the various parts of economic
policy. Each of the reforms was justified and beneficial
for the future. Deregulation made it easier for individuals and companies to manage their finances, but
the lack of coordination and timing gave rise to major
strains during the transition.
In the end, tensions in the economy became too
much to handle. In early 1990 the real estate market
collapsed, dragging much of the financial world with
it. The only bank that survived relatively unscathed was
Handelsbanken, perhaps because it had fresh memories of its crisis in the 1960s to draw from.
The strain on the banks and insurance companies
was presumably greater and more lasting than on the
export companies. To a great extent the crisis was a
Western European downturn, triggered by the monetary policy tremors that followed Germany’s reunification, but for Sweden’s part it was exacerbated by
homemade mistakes. When the Swedish krona was allowed to float in November 1992, the countries’ export
companies experienced a sharp boost in competiveness.
Demand in North America and Asia barely felt the effects of any crisis, and this gave a boost to the Swedish
recovery.
16
The situation was all that much more sluggish for
the domestic market. The rapid drop in inflation drove
up real interest rates to 8–10 percent. The tax reform
led to a sharply higher interest burden for households,
which reversed from a negative to a strongly positive
savings quotient in only a couple years’ time, which
also lowered domestic activity. Unemployment shot
upward. Many of the unemployed were edged out for
good and were forced into long-term sick leave and
early retirement, making it more difficult to restore
balance in the public finances.
And yet they succeeded. In many important respects, the crisis in the 1990s led to a sobering in the
Swedish economy. The most important change from
a longer time perspective was that Sweden became
a member of the European Union, but a number of
domestic, structural reforms were also brought about.
Riksbanken’s independence and inflation target
brought stability to monetary policy. The finance
policies were kept in check by the new Budget Act
and surplus target. The labor market parties (almost)
cleaned up all the old stipulations and moved toward
decentralized and individual wage determination. Key
areas of public life were deregulated and reformed, and
Sweden attained one of the world’s most stable public
pension systems.
Since the mid-1990s, average productivity growth
in the Swedish economy has been stronger than any
other time since the 1960s. In the first years of the decade, the sharp rise in productivity could be explained
by the recovery following the deep crisis. With higher
demand, resources that had lain uncultivated could be
put to use without major cost. It is a pattern that is
common in economic upswings.
But the upswing in productivity lasted longer than
that. Two factors that may have played a role are the it
investments of the 1980s – whose efficiency improvements took time to gain hold – but also the change in
wage determination. Through individual performance
reviews, managers have obtained a powerful tool to
17
spur employee performance and discuss the focus of
the business with each and every employee. These new
conditions for wage determination are a factor that will
be important to heed for the future.
From the mid-1990s and ten years thereafter, development of the world’s financial markets was relatively
calm, aside from a few major disruptions. Both Russia
and the emerging economies in Asia were shaken by
crises. The pursuit of favorable returns created bubbles,
in certain cases – as with information technology –
surrounding entire industries, and in others surrounding individual companies. Skandia’s ascent in the early
2000s is an example.
However, the picture changed radically from 2007
to 2009, when problems in the u.s. financial market
triggered the sharpest drop in the global economy
since the 1930s. Owing to support measures by central
banks and governments, the drop leveled out in fall
2009, but at the time this book went to press, the recovery appeared to be very fragile, with cause for concern surfacing from time to time. Many governments
are facing the difficult task of eliminating stimulus
measures in order to deal with growing budget deficits
at the same time that demand is weak.
For Sweden’s part, the picture is somewhat brighter
for the time being. It is possible that Sweden’s painful experiences from the 1990s have prepared it for a
calmer journey through the ongoing crisis that is still
unfolding in many countries. Strong public finances
and a generally wise timing of finance policies seem to
have led to more stable development in the domestic
market than during the previous crisis. Activity has not
fallen as sharply as the last time, but rather, the home
market has to some extent parried the drop in demand
for exports.
Globalization
In recent decades the scope of Sweden’s foreign trade
has grown sharply. Exports have skyrocketed. The
country’s major export companies have grown increas-
ingly dependent on developments in the markets in
which they conduct their sales, and thus the performance of the Swedish economy has decreased in
significance for how the companies manage.
However, from the Swedish perspective, it is
significant which companies grow and how well they
meet demand in the world market. In the decades immediately following the Second World War, Europe’s
rebuilding provided a vital lever for Swedish exports,
but in the 1970s and ’80s, important Swedish industries fell out of synch with the general development.
Shipbuilding and steel met superior competition, not
least from new industrial countries that established a
foothold in these industries.
In recent decades, development has once again
taken another turn. At a time when information technology is reshaping much of the world’s production
and communication, Ericsson is among the internationally leading companies. The restructured ssab has
specialized its steel production and benefited from the
strong commodities markets. With ikea, h&m and
KappAhl, Sweden has established a strong position in
retailing. The country’s logistics expertise has become
an important export asset.
At the same time, the conditions for holding
companies have changed. As a result of the crisis in
the 1990s, households have increased their savings and
interest in financial investments. As in other parts of
the world, pension savings have grown considerably
in scope – initially through private savings, but during
the last ten years also through the ppm system and
increasingly extensive contractual insurance schemes.
This greater access to venture capital has made it possible for new players to become active in providing
capital to new small and midcap companies. With this
increase in players, specialization has increased among
the capital providers.
Conversely, the country’s holding companies offer
personal investors a distinct investment alternative –
different than stock in individual industrial companies
or units in ordinary stock funds. The multitude of options benefits an interest in saving.
Industrivärden has drawn back from the seed
capital and the early venture capital market, and it has
ended its involvement in wholly owned subsidiaries.
Instead, the company has attained greater importance
as a long-term owner of large Swedish companies.
Here Industrivärden plays an important role in facilitating international restructuring, whether assisting
Swedish export companies with their acquisitions in
other markets or participating in constructive solutions
when foreign companies acquire Swedish companies,
such as plm and aga. The company participates in
large new issues. Industrivärden has also taken an
active part when companies have developed their traditional businesses towards more profitable specialties,
such as in the case with sca and ssab.
Despite the fact that capital flows have become
global, well-attuned players often have an information edge in their home markets. But Industrivärden
has signaled a new definition of home market when
it emphasizes that it now monitors the entire Nordic
market, even if the only tangible results of this focus
to date has been the transitory involvements in the
Danish pharmaceutical company Lundbeck and the
Icelandic orthopedics company Össur.
Institutional factors
Industrivärden’s formation and development are a
prime example of the significance of institutions for
how economies develop. It was rules surrounding
banks’ shareholdings that led to Handelsbanken taking
the initiative to establishing the company, but even
during the course of its business, legislative changes
have played a role.
Government regulation has spurred financial
creativity. It was the tax rules in 1988 that prompted
Industrivärden to introduce convertible participating
notes (cpn’s), which took advantage of the rule that
interest expenses were tax-deductible, in contrast to
18
stock dividends. In 1994, new legal rules for taxation of
stocks made these considerations moot.
Another example of how tax rules affected behaviors was the decision to eliminate capital gains tax on
business-related shares on July 1, 2003. Business-related
shares include unlisted shares or market-listed shares
in which the holding corresponds to 10 percent of the
number of votes. This prompted Industrivärden to
increase its holdings in Handelsbanken and Sandvik
to more than 10 percent in each of these companies.
Today Industrivärden has voting stakes in excess of 10
percent in eight of the ten companies that the company was a major shareholder of at the start of 2010.
But it is not only government regulations that have
stimulated creativity. The “holding company discount”
has long been considered to be a hindrance to attracting capital – whereby new issues would cause existing
shareholders to miss out on a share of the companies’
net asset value without receiving any compensation. In
January 2010 Industrivärden issued a European bond
that tackled the discount problem by offering bondholders an opportunity to convert their loans to stock
at a price that corresponds to current net asset value,
not the discounted price on the stock market. This has
shown that it is possible to increase the company’s
equity without encroaching on the rights of the existing owners.
Industrivärden through the years
Industrivärden’s first 65 years are a fascinating mirror of
the time that has passed. While changes in the operating environment have rippled through Industrivärden’s
business, the company has also helped shape its world.
It was laws that created the conditions for holding
companies, but not only that. The banks’ need to defend their spheres of influence also played a role. Gunnar Sträng’s attention to housing policy opened oppor­
tunities for the construction industry. Trends can be
seen in the past: the conglomerate Nils Dacke emerges
and is transformed in Industrivärden, Fermenta makes
19
a semi-forced and very costly guest appearance, and
the company is drawn in to the complicated crossownership surrounding Skanska.
During the time of regulated capital flows, Industrivärden took on a broad role, from corporate governance of large, established companies to leading and
helping small and midcap companies in which the
holding company’s industrial knowledge was arguably
just as important as its capital.
As a result of deregulation, the company can
gradually draw back from this type of ownership, but
then globalization presents new demands. The flow of
capital across borders, the enormous growth in exports
and international restructuring require strong and
long-term investors and active owners. Industrivärden
is one of the few Swedish players that has the prospects needed to play that role.
A brief history
to understand the background of Industrivärden’s formation
in 1944, it helps to have an understanding of the weak economic
development in Sweden and other countries during the period
between the two world wars. During the entire period 1913–1938, per
capita national income in Europe’s principal countries grew by less
than one percent per year.
Swedish industrialist and financier Ivar Kreuger was well known
by most, but what is less well known is that he was the originator
behind Svenska Cellulosabolaget (sca), which has been a major
Industrivärden shareholding since 1950. At the peak of his dominance in 1930, Kreuger reigned over a concern that had full control
over four of Sweden’s largest industrial companies – stab, sca, LM
Ericsson and Boliden – and that also had large equity interests in a
number of other major companies.
Following Kreuger’s death in 1932, a special moratorium was
required to rescue stab and LM Ericsson, both of which had major
claims on Kreuger & Toll’s bankruptcy estate. Handelsbanken’s involvement in the Kreuger concern pertained mainly to sca and LM
Ericsson. Through a public auction, Handelsbanken acquired all of
the shares in sca to protect its claim.
In order to protect its receivables, during the economic slump in
the 1930s Handelsbanken was forced to acquire substantial shareholdings in several other industrial companies, including Fagersta,
Reymersholm, Bolinder-Munktell, and most importantly, LM
Ericsson.
The Banking Act of 1933 stipulated that banks could only own
stock to protect distressed assets, which in practice entailed that
banks’ shareholdings were to be sold as soon as practically possible.
Handelsbanken thus chose to establish a holding company, like
Enskilda Banken had previously done with Investor and Skandinavbanken with Custos. Handelsbanken’s holding company, which
was established in 1944 and listed on the stock market in 1945 after
20
its stock was sold to Handelsbanken’s shareholders, was given the
name Industrivärden.
Upon its formation, Industrivärden had an equities portfolio
consisting of majority holdings in the steel company Fagersta, the
power company Hammarforsen and the textile company Kilsund,
plus sizable minority holdings in LM Ericsson, the phosphate company Reymersholm, the forest company Bergvik och Ala, and the
textile company Almedahl-Dahlsjöfors. The portfolio also included
subordinated debentures in the engineering company BolinderMunktell, which were transferred to Handelsbanken in 1950 in
exchange for shares in sca.
During the 1940s and 1950s the level of activity in Industrivärden’s
portfolio was relatively low. Apart from complementary purchases
and sales of stock in these companies, the company Gullhögens Bruk
was added as a new subsidiary, while new shareholdings were acquired in aga, Svenska Metallverken and Borås Wäfveri.
During the 1960s, Industrivärden bought stock in the engineering companies plm and Bahco. Investment ab Promotion was
established in 1962, with Industrivärden as the largest owner. A
number of structural deals were also carried out, including the sale
of stock in Hammarforsen in exchange for stock in sca, the sale
of the shareholding in Bergvik och Ala to Investor in connection
with sca’s acquisition of all of the shares in the forest company
Wifstavarf, and the sales of the shareholdings in Reymersholm and
Metallverken in exchange for stock in Boliden and Gränges. In
addition, new subsidiaries were added during the 1960s through the
acquisition of all of the shares in John Mattson Byggnads AB (jm)
and the building materials company Olsson & Rosenlund.
Industrivärden purchased its first shares in Handelsbanken in
1963. A long succession of purchases were then made in the decades
that followed until 2002, at which time Handelsbanken was the
largest holding in terms of value.
During the 1970s, Gullhögen’s cement manufacturing operation
was sold, while the subsidiary Gullfiber was kept. In addition, the
shareholding in Fagersta was sold in exchange for stock in Sandvik.
The 1980s were considerably more eventful than the previous
decades. The property company Fundament was formed in 1981
through the acquisition of several investment properties from jm
and Olsson & Rosenlund. In 1982 jm was listed on the stock mar-
21
DACKE
ket, with Industrivärden as the majority owner. Indus Innovation
was formed in 1984 to provide venture capital to small, technologyoriented companies. The company was wound up after a few years
for a small profit. Gullfiber was broken up into an insulation products business, which was sold to the minority owner Saint Gobain,
and a hearing protection and acoustics product business, which
was sold after a few years. The shareholding in jm was sold in 1987
in exchange for stock in Skanska. plm became a wholly owned
subsidiary in 1987 through Industrivärden’s issuance of convertible
participating notes (cpn’s) as payment in a public takeover bid.
The engineering company Nils Dacke, with operations in southern
Sweden, became a wholly owned subsidiary in 1989 after nearly
half of its shares had been acquired in 1986. The technology trading
company Indutrade was broken off from Nils Dacke in 1990 in an
effort to refine its business.
In 1986 Industrivärden came to be the principal owner of
Fermenta through unfortunate circumstances, following the failed
creation of a conceived industrial structure for the Swedish biotechnology industry. A significant shareholding had been “parked”
with Industrivärden while waiting for Fermenta’s principal owner,
Refaat El-Sayed, to sell his own shares to Volvo, which was the
principal owner of a number of pharmaceutical companies. When
it was learned in December 1986 that Fermenta’s reported earnings
had been falsified, Fermenta came to the brink of suspending all
payments. To protect its claim, Industrivärden had no other choice
than to take over the shares pledged by El-Sayed. In the years that
followed, Fermenta was restructured several times without achieving profitability, and in 1993 Industrivärden sold its holding in
Fermenta for one krona and a substantial loss.
The 1990s were also characterized by a large level of activity. In
1991, Investment ab Bahco, comprising nine industrial companies,
was acquired and combined with Dacke to form Inductus. Industrivärden thereby owned a portfolio of listed stocks plus the wholly
owned subsidiaries plm, Inductus, Indutrade and Fundament,
which together accounted for nearly half of the company’s assets.
plm was gradually restructured during the years 1988–1994 into
a pure beverage and food packaging company. Industrivärden divested plm in three rounds – starting with 55 percent of the shares
in 1995 through a favorable offer to Industrivärden’s shareholders,
22
followed by 22 percent to the market in 1996 and the remaining 23
percent to the British company Rexam in 1998, which had made an
offer for all of the shares in plm.
Inductus and Fundament were consolidated through successive
divestments and combinations. The largest deals were the divestments of Thorsman and Fundament in 1997.
A number of major transactions were carried out within the
equity portfolio during the 1990s. The first equity investment in ssab
was made in 1994 when Industrivärden exercised purchase rights that
had been acquired in 1992. A sizable shareholding in Sandvik was
acquired in 1997. Industrivärden sold its stock in aga in 1999 following a number of structural deals in the gas industry. A pharmaceutical
portfolio was then built up, comprising holdings in Pfizer, Lundbeck
and Pharmacia. A major stake was built up in Skandia, and Industrivärden became the second-largest shareholder of that company.
The first decade of the new millennium was characterized by
continued high activity. The shareholdings in the pharmaceutical
company Lundbeck and the engineering company Besam were sold
in 2002 for considerable capital gains. The holding in Skandia was
sold in 2003 and the proceeds were invested in other long-term
shareholdings.
The cpn loan, which was raised in connection with the acquisition of plm in 1988, was canceled in 2001 to simplify the share
structure. Industrivärden thereafter has only two classes of stock,
compared with four classes and four cpn series in 1988.
An important strategic decision was made in 2002, namely, that
Industrivärden would be a “trusted active owner” with a transparent and concentrated equities portfolio, consisting mainly of large
and midcap listed Nordic companies. As an active owner, Industrivärden would participate in the companies’ development. The
investment operation would be based on a structured process of
continuous analysis of existing and potential holdings. Thus had
been initiated a consolidation process towards a pure holding company, which would continue until 2006, when the last wholly owned
subsidiary, Isaberg Rapid, was sold.
A separate function that conducts market operations to support the investment activities was established in 2003 through the
subsidiary Nordinvest, which executes Industrivärden’s investment
decisions. Nordinvest also conducts short-term trading in the form
23
of derivative transactions by Industrivärden and equity transactions
by Nordinvest. This short-term trading has covered Industrivärden’s
management costs since the start.
Munters became a new, small shareholding in 2002, and Höganäs in 2005. Indutrade was introduced on the stock market in
2005 in an initial public offering in which Industrivärden stayed on
as the largest shareholder.
Volvo became a new, large holding through successive purchases
starting in 2004. The company had previously been included in
Industrivärden’s equities portfolio, but the original holding was sold
in the early 1990s in connection with Renault’s bid for Volvo, which
at the time also included Volvo’s car business.
Two major new issues were carried out by companies in Industrivärden’s portfolio during the 2000s, namely, by Ericsson in 2002
to ensure the company’s survival, and by ssab in 2007 to finance a
major company acquisition in the u.s. Industrivärden subscribed
for its share in both of these issues, for sek 0.7 billion and sek 2.3
billion, respectively.
Major equity transactions and company management during various time periods
Acquisitions
Fagersta
Ericsson
Bergvik och Ala
Hammarforsen
Reymersholm
SCA
AGA
Gullhögen
Bahco
JM
Promotion1
Handelsbanken
Gullfiber
1945 19501960 1970
Hammarforsen
Reymersholm
Bergvik och Ala
Divestments/stock market
introductions
Chairman
Helmer Stén
(1944-1950)
Sten Westerberg Ernfridh Browaldh
(1950-1955)
(1956-1965)
CEO
Stig Ödmark
(1944-1946)
Allan Wettermark
(1947-1955)
Stig Ödmark
(1960-1966)
Gullhögen
Fagersta
Tore Browaldh
(1965-1988)
Nils Berggren Per Lindberg
(1967-1976) (1976-1986)
Ferdinand Wallberg
(1956-1959)
1
Promotion acquired Bahco in 1992 and changed its name to Investment AB Bahco.
24
At year-end 2009 Industrivärden was a pure holding company
that exercises active ownership through sizable shareholdings in
Handelsbanken, Sandvik, sca, ssab, Ericsson, Volvo, Skanska and
Indutrade, plus minor holdings in Munters and Höganäs. The work
on continuous analysis of existing and prospective shareholdings
is conducted efficiently and systematically in accordance with an
established business model.
Industrivärden 2009
Fundament
Nils Dacke2
Fermenta
Skanska
PLM
Bahco3
SSAB
Sandvik
Lundbeck
Skandia
1980
1990
Gullfiber
JM
PLM
Fermenta
Munters
Höganäs
2000
Fundament
Thorsman
AGA
Lundbeck
Besam
Skandia
Bo Rydin
(1988-2002)
Kjell Brändström
(1986-1989)
Carl-Erik Feinsilber
(1990-1994)
2
Investment AB Nils Dacke owned Indutrade, among other companies.
3
Investment AB Bahco owned Besam and Thorsman, among other companies.
25
Volvo
Indutrade
Tom Hedelius
(2002-present)
Clas Reuterskiöld
(1994-2001)
Anders Nyrén
(2001-present)
Economic development during the 1920s and ’30s
Weak growth between the world wars
the history of industrivärden dates back to the economic
development between the First and Second World Wars in the
1920s and ’30s. The time between the two world wars covered twenty years. During this period, two international economic depressions took place, one in the early 1920s and one in the early 1930s.
The “normal” economic climate was essentially limited to the years
1923–1929 and 1933–1939. During the entire period 1913–1938, per
capital national income in the three, principal European countries –
the uk, Germany and France – rose by only 10–20 percent, or by an
average of less than one percent per year.
Economic development in Sweden during the years 1915–1923
resembled the letter W. The changes in the real gross national
product during these years were the most dramatic that had been
observed during the preceding 100 years, with fluctuations from at
most +12 percent in 1919 to -12 percent in 1920. The general price
level fell sharply during the first years of the 1920s and continued
to fall at a slow pace during the rest of the 1920s. Deflation led to
a sharp drop in the stock market, with the index falling from 375 at
the start of 1917 to a low of 60 at the start of 1922, or by 84 percent.
Bank lending against collateral in equities amounted to a full 42
percent. The share of lending for equities fell to 30 percent in 1922,
but the market value of these equities corresponded to only just
over half of the recommended lending prices.
Swedish banking laws from 1911 put restrictions on banks’ right
to buy and guarantee issues of stock in industrial companies. To
finance companies and issue their stock, so-called “issue companies”
were formed, which can be equated to what are today referred to
as venture capital companies. A bank’s exposure to a certain company could thereby be much greater than the limitation prescribed
by law. First, an industrial company itself could have bank loans
against collateral in the company’s tangible assets. Second, an “issue
company” that owned stock in a company could pledge that stock
26
Swedish daily newspaper Svenska Dagbladet, November 1922. The headline
reads: “Thorough consolidation at
Svenska Handelsbanken: SEK 95 million
written off.” In 2009 monetary value,
these loan losses amounted to roughly
SEK 2 billion.
as collateral against bank loans. Third, the private shareholders of
an “issue company” could borrow against their stock. In this way,
the bank’s exposure could be three-faceted. The “issue companies,”
which were responsible for substantial losses in the banking system,
were disbanded in connection with the reconstructions and banking
crises in the 1920s. The banks thereby came to own stock in industrial companies to a significant extent. The Banking Act of 1933
introduced the rule (which still applies today) that a bank may only
own stock taken over to protect a receivable.
As in the 1920s, Sweden’s crisis in the 1930s was triggered by the
international depression. However, this time, the effect on Sweden was much milder than in many other countries. Between 1929
and 1932, industrial production was halved in the u.s. as well as in
Germany, but fell by only 10 percent in Sweden. Employment fell
by 20 percent in the u.s., compared with only 5 percent in Sweden.
The big difference compared with the 1920s is that prices in Sweden were relatively stable, while consumer prices in the u.s. fell 25
percent by 1933. The main explanation for this is that the Swedish
krona was undervalued after Sweden left the gold standard in 1931.
The krona was thereby immediately devalued by 30-40 percent. The
Swedish Central Bank’s normal action of stabilizing prices after a
devaluation led to an undervaluation of the krona during the rest of
the 1930s. Sweden thereby experienced favorable economic growth
during the 1930s, by an average of 4 percent per year.
Text based on:
Karl-Gustaf Hildebrand: I omvandlingens tjänst.
Svenska Handelsbanken 1871–1955 (1971).
Johan A. Lybeck: Finansiella kriser förr och nu (1992).
27
Ivar Kreuger’s involvement in Tändsticksaktiebolaget,
SCA and LM Ericsson
Kreuger the dominant industrialist
ivar kreuger (1880–1932) was originally a construction engineer
and founded the construction company Kreuger & Toll in 1908,
which specialized in reinforced concrete. The company was involved
in several major construction projects, including the Stockholm
Olympic Stadium, the Nordiska Kompaniet department store, and
the foundation for Stockholm’s City Hall. The construction operations were subsequently broken off from Kreuger & Toll, which
ended up as a holding company with a number of various operations.
The Kreuger family owned match factories in Kalmar and Mönsterås, which became the building blocks for a total restructuring of
the Swedish match industry through the formation in 1917 of Svenska Tändsticksaktiebolaget (stab), with Ivar Kreuger as President.
Operations expanded rapidly, forming a combined industrial and
financial conglomerate with stab as the foundation.
Match consortium
With stab as a base, Kreuger set extensive activity in motion to
gain a foothold in the most important markets. His interest was
initially focused on the Scandinavian countries through acquisitions of match factories in Norway, Denmark and Finland. This
acquisition activity continued through purchases of match factories
in England, Belgium, Austria, Czechoslovakia and Hungary. To arrange financing, a consortium was formed. Loans were raised with
Handelsbanken and Skandinavbanken. The commitments were of
such scope that the banks essentially became dependent on Kreuger
and his ability to see projects through. Sweden’s banking regulator
at the time, the Bank Inspection Board Office, had pointed out the
unsuitability of granting large loans to a single entity.
Kreuger now adopted a new strategy, namely, to negotiate himself a monopoly on the manufacture or sale of matches in various
national markets. In return, Kreuger & Toll granted substantial
loans in foreign currency to the state in question.
28
An executive takes a bow to the
“Prince of Finance,” Ivar Kreuger.
When Kreuger’s match conglomerate was at its largest, it comprised some 250 factories in 43 countries, including a monopoly in
25 of these markets. This corresponded to 75 percent of the world’s
entire match production.
Stock market crash in New York 1929
In autumn 1929, final negotiations were in progress for the German
match monopoly, with a promised government loan of $125 million. Parallel with this, Kreuger was engaged in negotiations with
29
Headlines from the New York Times in
1931. A master manipulator in action.
Svenska Handelsbanken to acquire a number of forest industries in
Sweden’s Norrland province – a move that would later lead to the
formation of Svenska Cellulosabolaget (sca). In addition, he was in
negotiations with Skandinavbanken on the takeover of interests in
gold mines in Västerbotten, in northern Sweden, which became the
origins of the company Boliden, and on the acquisition of a majority stake in LM Ericsson. Also in autumn 1929, Kreuger took over a
major shareholding in Grängesberg from Skandinavbanken.
As a result of all of these commitments, Kreuger was in dire
need of liquidity. An issue of stock and participating debentures
was slated to take place in November 1929.
The remarkable and accelerating economic boom that unfolded in
the U.S. in the mid-1920s had led to sharply rising stock prices, which
made it possible for the Kreuger concern to carry out large new issues
in the U.S. market. On October 24, 1929 – “Black Thursday” – the
speculation bubble burst and stock prices plummeted in the days that
followed. Kreuger & Toll advertised its new issue the day before Black
Thursday. The issue was officially stated to be fully subscribed, but in
reality, Ivar Kreuger had personally subscribed for a large portion.
Svenska Cellulosabolaget
The most constructive industrial venture that Ivar Kreuger can be
credited for aside from matches was the creation of Svenska Cellulosabolaget (sca).
30
The forest industry in Sweden’s Norrland province rested on a
foundation of large, tangible values of forests and hydro power, but
it had a highly divergent company culture and weak profitability.
The formation of a company grouping, combined with efficiency
improvement measures, new investment and a joint sales organization, could create significant coordination gains of an industrial as
well as financial nature.
Svenska Handelsbanken was the predominant bank in Norr­
land, with substantial ownership interests in Norrland’s forest
industry. During hard times, the bank had seized stock in distressed
companies in order to protect its credits. In late spring 1929, Ivar
Kreuger put the question to the bank’s president, Helmer Stén, if
the bank would be interested in selling its interests in the forest
industry. In August Handelsbanken sold its interests in a number
of forest companies in Norrland to Kreuger & Toll for sek 40
million. The stock was transferred to the newly formed company
Svenska Cellulosabolaget, to which was also transferred the stock
in Skönviks AB and Kramfors AB, and in two power companies,
Hammarforsen and Sikfors. The total stock acquisitions amounted
to sek 130 million. Upon its formation, the sca concern accounted
for approximately 20 percent of Sweden’s total production of pulp
and solid wood products.
LM Ericsson
LM Ericsson (lme) was established through the 1918 merger
between the two companies that had been started by the pioneers
of Sweden’s telephone industry, Lars-Magnus Ericsson and Henrik
Tore Cedergren. Following the merger, the company founded by
Cedergren, Stockholms Allmänna Telefon ab, which specialized in
telephone traffic, was the second largest shareholder in lme with 10
percent of the capital stock. The company’s expansion in the international markets required substantial financial injections. Contacts
with Kreuger were thus natural in negotiations for telephone licenses in various countries, which could be coordinated with stab’s
monopoly negotiations in the match industry.
Ivar Kreuger acquired stock in lme by taking over Cedergren’s
holding and through purchases made directly or via Kreuger & Toll.
At year-end 1930 the Kreuger concern owned 71 percent of lme’s
stock.
31
Ivar Kreuger’s visit to the Sundsvall district
in August 1929, which is described in this
press clipp, received extensive coverage in
the Swedish press.
The Kreuger empire
In 1930 Kreuger reigned over a concern that was unrivaled in
Swedish industry, with full control over four of the country’s largest industrial companies – stab, sca, lme and Boliden – and
with major equity interests in a number of other large companies,
including Grängesberg, skf, Stora Kopparberg and Separator.
Kreuger also had control over Hufvudstaden – the country’s largest property management company – and substantial interests in
a number of banks, including Skandinavbanken, Handelsbanken,
Inteckningsbanken, and a number of provincial banks.
Liquidity crisis
Ivar Kreuger and his closest associates.
In 1931 the Kreuger concern’s liquidity need amounted to slightly
more than sek 500 million for monopoly loans made to a number
of countries, interest on bonds and payment of shareholder dividends. The inflow of interest on issued bonds amounted to only a
fraction of the outgoing payments, which is why new issues of stock
and bonds, as well as bank loans, were needed. The contribution from
these issues covered only half of the payment claims. In this situation,
Kreuger sold his majority shareholding in lme to the u.s. company
itt, which remained a major owner of lme until 1960.
The Kreuger concern had now lost the stock market’s confidence, and the price of stab’s stock was more than halved in 1931.
The end
Kreuger was forced to turn to Riksbanken (the Central Bank of
Sweden) to obtain credit support after a number of foreign banks
canceled their loans to his concern. With Riksbanken as guarantor,
the largest Swedish commercial banks, with the exception of Stockholms Enskilda Bank, agreed to grant new credits under the condition that a complete review was performed of the Kreuger concern.
Ivar Kreuger was now under heavy pressure and in the end saw no
other way out than to take his own life. He was found dead in a
hotel room in Paris in March 1932. The circumstances surrounding
his death have never been made entirely clear.
Dissolution of the empire
The investigation of the Kreuger concern’s financial position that
was performed by Price Waterhouse showed that certain assets
32
were double booked in different companies within the concern, and
that the reported profits were based on fictive entries. No one else
than Ivar Kreuger had had complete insight into the accounting.
Bankruptcy proceedings for Kreuger & Toll were unavoidable.
Of the Kreuger concern’s subsidiaries, stab and lme – both of
which had major claims on the bankruptcy estate – were in a particularly precarious situation, but could be saved through a special
moratorium and new credit measures granted by the banks.
Kreuger had invested sek 100 million in sca. In a public auction, Handelsbanken – as the sole bidder – was able to take over
the shares for only sek 9 million. At this time sca was essentially
bankrupt following major losses caused by the recession. It was not
until 1950 that Handelsbanken was able to break its ties with sca
after investing substantial amounts in the form of loans and interest
concessions.
Stockholms Enskilda Bank, which had become involved in
Kreuger’s companies only to a minor extent, was less affected by
the crash than the other major banks. Through the redemption of
pledged assets, it was able to acquire significant shareholdings in
stab, lme, skf and Grängesberg.
Handelsbanken’s involvement
Handelsbanken’s involvement in the Kreuger concern pertained
mainly to the concern’s purchase of stock in sca. The dissolution of
other loans made to Kreuger & Toll was drawn out over time and
was not finally completed until the 1940s, but could be carried out
without a permanent loss.
However, the bank’s largest involvement in the Kreuger concern
was lme. In 1932 the bank accounted for approximately 45 percent
of lme’s Swedish bank credits. Together with Skandinavbanken
and Stockholms Enskilda Bank, Handelsbanken participated in
a settlement that gave lme an extension of its bank loans and a
guarantee for a new operating loan.
Text based on: Lars-Erik Thunholm: Ivar Kreuger (1995).
33
Handelsbanken major industrial owner in the 1930s
Receivables converted to stock
the right for banks to own stock has shifted during various
time periods. In the early 1900s banks were allowed to acquire stock
to a certain, limited extent and in relation to the bank’s financial
position above and beyond the stock acquisition that was necessary to protect a receivable. In 1933 a ban was instituted on the right
to acquire stock without a special permit for anything else than
to protect distressed assets. The chief aim of the legislative change
in 1933 was thus to ensure that banks divest their shareholdings as
soon as practically possible.
During the 1930s Handelsbanken owned sizable shareholdings in a number of industrial companies, including sca, Fagersta,
Bolinder-Munktell and LM Ericsson, which were subsequently
transferred to the holding company Industrivärden when it was
established in 1944.
A political cartoon depicts Helmer Stén
strewing gold over the forest industry in
Sweden’s Norrland province.
SCA
Svenska Cellulosaaktiebolaget (sca) was founded in 1929 under the
initiative of Ivar Kreuger. At the time, the forest industry in Sweden’s Norrland province had been suffering from a severe downturn
following the deep recession in the early 1920s. Capitalizing on the
forest companies’ future opportunities would require that they be
combined into a larger unit with sufficient financial resources. Following a swift analysis by Handelsbanken, in 1929 Kreuger bought
stock in the newly formed sca for an initial price of sek 40 million. The forest companies originally included in sca were Bergvik
och Ala, Skönsvik, Svartvik, Björknäs Sågverk and Holmsund,
among others. In the years that followed, Ivar Kreuger transferred
shareholdings in several other forest companies in Norrland to sca,
the largest of which was Sunds ab. Later, sca acquired options to
buy stock in Munksund.
Following Kreuger’s death, sca came to be owned by Kreuger &
Toll’s bankruptcy estate, with Handelsbanken clearly as the largest
34
The formation of SCA in 1929 was
the source of lively commentary in the
press. This political cartoon depicts Ivar
Kreuger followed by Helmer Stén
(dressed as a bear).
creditor. Responsibility for sca’s continued existence thereby rested
with Handelsbanken, which bought the company’s stock for sek 9
million as the sole bidder in a public auction.
Handelsbanken’s involvement in sca became very extensive.
An internal memo from 1939 included the sarcastic statement that
“Handelsbanken now consisted of three parts: the head offices,
Provinscentralen (i.e., the regional banks) and Cellulosabolaget.”
During the period 1934–1947, the financier Axel Wenner-Gren
was a major shareholder of sca. He financed his share purchases
through payment in Electrolux stock and loans from Handelsbanken. In 1947 Wenner-Gren offered to buy the bank’s stock in
sca, but the bank instead bought Wenner-Gren’s stock in order to
subsequently be able to sell the entire shareholding. This took place
in 1950 when most of the capital stock was offered to Handelsbanken’s shareholders.
In preparation for the establishment of Industrivärden, in 1943
sca transferred most of its stock in Bergvik och Ala and its entire
shareholding in Hammarforsens Kraft to the bank. Industrivärden
bought its first shares in sca in 1950 in exchange for subordinated
debentures in Bolinder-Munktell.
35
Helmer Stén, President of Handelsbanken.
Fagersta
When it began operating in 1927, the Fagersta concern comprised
four steel mills, namely, Fagersta Bruk, Horndals Jernverk, Kosters
and Gimo-Österby Bruk. Forsbacka Jernverk was added later.
Handelsbanken was the dominant lender to the concern. As a result
of poor profitability during the depression, the bank’s lending had
to be successively increased. A financial cleanup of Fagersta became
necessary, and between 1934 and 1937, forestlands and power plants
were sold. The bank wrote down a large share of its receivables.
New investments were made in rolling mills, furnaces and foundries. Following this cleanup, Fagersta was once again able to pay
interest on its loans and generate an increasingly sizable profit.
Handelsbanken converted a large share of its receivables to stock.
In connection with the formation of Industrivärden, the bank sold
half of the capital stock to Industrivärden at a favorable price, while
the other half was sold to the general public. In total, the stock sales
covered the capital that the bank had invested in Fagersta, including interest concessions.
Bolinder-Munktell
A tractor manufactured by Munktell in
the 1920s.
Munktell, a tractor manufacturer in Eskilstuna, went bankrupt in
1922 following overly rapid expansion during the war years. The
business was taken over by a new company with the same name,
which was wholly owned by Mälarebanken. Handelsbanken took
over the latter in 1926. On account of the depression in the 1930s,
Munktell’s business contracted and the bank was forced to grant
additional loans at no interest. Instead of entirely shutting down
its business, Munktell took over Bolinders Mekaniska Verkstad in
Stockholm. Bolinders manufactured engines and woodworking machines, and was a valuable complement to Munktell’s underutilized
workshops. A financial reconstruction was carried out whereby
Handelsbanken wrote off a large share of its receivables and converted some to stock and subordinated debentures.
It was not until after Second World War that the combined
Bolinder-Munktell attained satisfactory profitability and could be
sold to Volvo in 1950. The subordinated debentures had been sold to
Industrivärden in 1943.
36
Reymersholm
Originally a distillery, Reymersholm was transferred to the state
spirits monopoly Vin- och spritcentralen in 1918 in connection with
the nationalization of Sweden’s alcohol industry. The proceeds were
invested in Skånska Superfosfat, which produced fertilizer and
sulfuric acid, but also had a copper mill based on copper mining in
Norway. In addition, Karlshamns Oljefabrik was acquired, which
produced vegetable oil. In the period between the two world wars,
the new businesses ran at a substantial loss on account of falling
prices. As the primary lender, Handelsbanken took over a majority
of the company’s stock in connection with a financial reconstruction in 1924. Karlshamns Oljefabrik and the copper mining operation were sold in the early 1930s. The Swedish phosphate production was coordinated in 1931 in the company Förenade Superfosfat,
in which Reymersholm acquired a majority interest.
In 1935 Handelsbanken transferred its stock in the now profitable Reymersholm to the holding company Regia, which came to
be included in Industrivärden’s initial equities portfolio.
Text based on: Karl-Gustaf Hildebrand: I omvandlingens tjänst.
Svenska Handelsbanken 1871–1955 (1971).
37
The Förenade Superfosfat factory in
Landskrona, Sweden.
Industrivärden established 1944
Shareholdings transferred to holding company
A consortium agreement was drawn up
between the owners of preferred stock in
Industrivärden.
the chief aim of the stipulation in the 1933 Banking Act that a
bank could only own stock to protect distressed assets was to ensure
that the sale of existing shareholdings would take place as soon as
practically possible. Handelsbanken had several conceivable options
for reducing its shareholdings. One alternative was to sell the stock on
the market, but this would be difficult, since it was a matter of large
shareholdings in unlisted companies. Another possibility was to find
individual buyers or consortia that were interested in taking over the
shareholdings in question. These two alternatives were considered to
be the least realistic. The remaining option was thus to create a holding company in which the bank’s shareholders would be given preferential rights to subscribe for shares, and to transfer a suitable number
of stocks to this company. In order for such a transaction to have good
opportunities for success, the sale of stock to the holding company
as well as the issue of the holding company’s stock would have to be
carried out at favorable prices. In addition, the law at the time allowed
the bank to continue to have a strong influence even after the sale.
There were two conceivable examples to follow in the establishment of Handelsbanken’s holding company. Stockholms Enskilda
Bank had created Investor back in 1916, while Custos had been established by Skandinavbanken in 1937. By the mid-1940s Investor had a
well composed equities portfolio, while Custos’s equities portfolio was
dominated by a handful of large shareholdings that were taken over
from Skandinavbanken. Custos owned preferred shares carrying 100
votes each, while its common stock had only one vote, which meant
that shareholder meetings could be dominated by preferred shareholders with close ties to Skandinavbanken. Handelsbanken decided
to apply the same principle in the formation of Industrivärden.
Memos addressing the formation of a holding company for
Handelsbanken’s shareholdings were presented to the bank’s board in
autumn 1943. The board voted unanimously to form a holding company that was given the name Industrivärden (Eng. trans.: “Industry +
38
Press commentary on the formation of Industrivärden was
generally positive. The articles depicted here describe the
terms of Handelsbanken’s arrangement with Industrivärden.
39
A document from the
Swedish Companies
Registration Office
showing the date -–
February 21, 1944
– on which Industrivärden was officially
registered.
value” or, financial value from investments in industrial companies),
which alluded to the substantial industrial value that the company’s
equities portfolio represented. Other, more imaginative name suggestions were Eos (“the Titan goddess of dawn with rosy fingers”),
Mjölner (the hammer of Thor, the Norse god of thunder) and Bonitas
(goodness, excellence). Formation of the company proceeded thereafter and was completed on February 21, 1944, when the company was
formally incorporated.
To ensure control over the newly formed holding company, it was
structured to include preferential capital, which corresponded to 1
percent of the capital stock but where each preferential share carried
100 votes, compared with one vote per common share. Dividends for
preferred stock were limited to 5 percent of the capital stock. All of the
preferred stock was subscribed by a consortium consisting of a number
of board members and executives of the bank. The arrangements to
ensure the bank’s dominance were questioned in connection with the
filing of the application for the stock market introduction in early 1945,
and in 1947 the decision was made to redeem all of the preferred stock.
To ensure that the share issue in conjunction with the stock market introduction was fully subscribed, Handelsbanken’s board decided
that the transfer of shares to Industrivärden would be made at prices
that were below the market value of the equities portfolio by sek 10
million. A hidden reserve, or surplus value in today’s terminology, was
thereby created.
With respect to the company’s level of debt, the board expressed
that Industrivärden’s liabilities should not exceed 50 percent of its assets, defined as the book value of the equities portfolio.
The number of common shareholders of Handelsbanken who
would have preferential rights to subscribe for shares in Industrivärden’s issue was roughly 25,000 at the start of 1944. It was believed
that many of these would have a hard time coming up with payment
for subscribed shares, so the decision was therefore made that payment would be made in four equal parts during the course of one year
40
Notices from the business
weekly Affärsvärlden in 1944
announcing Industrivärden’s
formation.
from the start of the subscription period.
According to the memorandum of incorporation, the company’s
financial year would run from October 1 to September 30, and the annual meeting would be held before the end of the month of March.
The issue was oversubscribed by slightly more than 20 percent,
with 9,660 persons subscribing for shares at a par value of SEK 100.
In 1944 Industrivärden’s stock was introduced to the list of unlisted
securities with prices between sek 105 and sek 127.
According to the applicable rules at the time, the stock market introduction could not be carried out until the company had completed
one year of operation. On March 21, 1945, when Industrivärden’s stock
was quoted for the first time on the market’s A:1 list, its price was
SEK 150-155.
Since the redemption of the preferred shares in 1947, Industrivärden had not any dominant shareholder
Overall, press commentary in connection with Industrivärden’s
formation and stock market introduction was positive. However, there
was one exception, which is shown in the following quote from Folkets
Dagblad Politiken on December 8, 1945:
An investigation by the state’s authorities of this issue in AB Industrivärden
is not only desirable, but warranted. In the interest of the people, it should be
ascertained how this financial operation was organized and who is profiting
from it. It should not be tolerated that persons who are appointed to manage
gigantic sums of the public’s funds are allowed to make enormous and easy
profits through speculation on the effects of deteriorating monetary values, the
result of which is that the public’s saved funds are transferred to these operators. It appears to us that the issue of AB Industrivärden conceals a number of
murky elements. It belongs to the class of obscure financial transactions.
The article shows the skepticism and lack of understanding with
which business and the stock market has always been regarded from
certain quarters.
41
Text based on: Karl-Gustaf Hildebrand: I
omvandlingens tjänst. Svenska Handelsbanken 1871–1955 (1971) and internal
memos from Handelsbanken in connection with the formation of Industrivärden.
Industrivärden from the start
Mixed holding company with several subsidiaries
Sture Ödmark, Industrivärden’s
first President.
at industrivärden’s inaugural shareholder meeting on
January 15, 1944, the following persons were elected to serve on
the board of directors: Helmer Stén (President and subsequently
Chairman of Handelsbanken), Axel Bergengren, K. F. Göransson,
Sten Westerberg (all three prominent industrialists and members
of Handelsbanken’s board), Baron Wilhelm Klingspor and Admiral
Fabian Tamm. The latter two were not involved in Handelsbanken
and were thereby considered to represent the shareholders in cases
involving the bank’s interests.
Helmer Stén was appointed to serve as Chairman of the Board,
and deputy board member Stig Ödmark, a member of Handelsbanken’s management, was appointed President.
Industrivärden did not have any premises of its own at the time
of its formation. Management and administration were provided by
Handelsbanken, without Industrivärden being charged any fee.
The stock in the forest company Bergvik och Ala and the power
company Hammarforsen had been acquired from sca as a means
of reducing sca’s debt. Moreover, Bergvik och Ala did not have any
geographic affiliation with the rest of the sca concern.
Later, the subordinated debentures in Bolinder-Munktell were
transferred to the bank; in exchange, Industrivärden acquired stock
in sca for the corresponding par value. The debentures could be
converted to stock, which is why the bank wanted to acquire them in
connection with the transfer of stock in Bolinder-Munktell to Volvo.
Industrivärden’s subscribed capital stock amounted to sek
25,250,000, of which sek 250,000 consisted of preferred stock with
100 votes per share, while sek 25 million consisted of common
stock with one vote per share.
The transfer value of the equities portfolio amounted to sek
48,600,000. The bank’s loans thus amounted to sek 23,350,000, or
40 percent of the calculated market value of securities valued at sek
58,600,000.
42
The equities portfolio included the following holdings upon Industrivärden’s formation:
Number of
shares
Share of
capital, %
Share of
votes, %
Market value
(SEK 000s)
Transfer value
(SEK 000s)
Fagersta
150,000
50.0
53.4
18,000
13,500
L M Ericsson
293,000
4.2
21.1
11,720
8,790
Bergvik och Ala
60,000
38.4
38.4
16,200
15,000
Forest
Hammarforsen
29,869
66.4
66.4
3,883
2,987
Power
Almedahl-Dahlsjöfors
34,810
21.4
21.4
1,741
1,392
Textiles
3,000
66.7
66.7
450
300
Textiles
550
36.6
36.6
Company
Kilsund
Regia
Total stocks
Bolinder-Munktell (subordinated debentures)
Total
For the first financial year, stock dividends and interest on the
debenture were estimated to amount to sek 2.8 million, or slightly
more than 5 percent of the portfolio’s market value. Dividends
from other stock corporations were tax-exempt under the laws that
applied at the time. After deducting interest of 4.5 percent on the
bank loan, the distributable profit was thus calculated to be sek 1.7
million, which was amply sufficient for a dividend equivalent to 5
percent of the capital stock.
In internal memos from the time leading up to Industrivärden’s
establishment, three requests were made by Handelsbanken, namely,
that the bank would retain the companies taken over as customers,
that the bank – through Industrivärden – wanted to create a body
in which to conduct new issues, and that the bank wanted to tie
new customers to itself through the stock purchases that Industrivärden would be making.
During the first, shortened financial year, only a few stock transactions were made. A small shareholding in Hammarforsen was
purchased. All of the shares in Fastighets ab Väktaren were bought
for sek 300,000, and the company’s name was later changed to
Hindus. The aim was that Hindus would assist in stock issues and
conduct trading in securities. Hindus’s first securities transaction
involved the purchase of 1,300 shares in LM Ericsson, which were
subsequently sold for a good profit.
43
1,650
1,650
53,644
43,619
5,000
5,000
58,644
48,619
Sector
Steel
Engineering
Holding
Engineering
Industrivärden’s first annual report, 1944.
A notice from Affärsvärlden on May 4,
1944, announcing the purchase of a
majority shareholding in Bergvik och Ala.
From the start, Industrivärden was in reality a mixed holding
company comprising the steel company Fagersta, the power company Hammarforsen and the textile company Kilsund as majorityowned subsidiaries. In addition, Industrivärden had substantial
minority interests in the engineering company LM Ericsson, the
forest company Bergvik och Ala, the textile company AlmedahlDahlsjöfors, and the holding company Regia, which was the majority owner of the phosphate company Reymersholm. Thus from
the time of its establishment, Industrivärden was a relatively large
group which, under later legislation, would have been required to
prepare an extensive presentation of its portfolio companies’ operations along with accompanying consolidated financial statements.
But the first printed annual report, for the period January 15–September 30, 1944, measured a total of eight quarter pages and provided only a summary administration report, a condensed income
statement and balance sheet, a specification of shareholdings and
a proposed distribution of earnings. The audit report was only as
extensive as the law required. Up until 1975 Industrivärden’s annual
44
reports came to be prepared in accordance with the “minimum by
law” principle and were thus quite scant.
At Industrivärden’s first annual meeting on December 14, 1944,
two preferred shareholders and 13 common shareholders were
present. The preferred shareholders represented 99.6 percent of the
number of votes at the meeting. The Board’s proposed distribution
of earnings was adopted, and the Board and auditors were reelected
with unchanged fees.
The board members of Industrivärden’s subsidiaries and associated companies belonged to Handelsbanken’s sphere of influence.
Axel Bergengren was Chairman of Fagersta and Kilsund, Helmer
Stén was Chairman of Bergvik och Ala and Regia, and Ernfrid
Browaldh was Vice Chairman of LM Ericsson and also Chairman
of Bolinder-Munktell. Industrivärden’s President, Stig Ödmark, was
also a board member of several of the portfolio companies.
With respect to the shareholding in LM Ericsson, a collaboration agreement had been in place since the 1930s between Handelsbanken and Stockholms Enskilda Bank with the substance that
neither would sell their Class a shares without first offering them
to the other party – in other words a first refusal agreement. In addition, the banks cooperated on board elections and other matters
concerning the company’s administration and management. The
background to this arrangement is that the American company itt
had been a major owner of lme since the Kreuger crash. In spring
1945 Industrivärden took Handelsbanken’s place as party to the
agreement. The agreement was dissolved in 1990.
On September 30, 1945, the equities portfolio had a book value
of sek 44.0 million, while the market value was calculated at sek
68.0 million. The surplus value had thus grown to sek 24.0 million.
In connection with the forthcoming adoption of a new Companies Act on January 1, 1948, in September 1947 the Board of
Directors decided to adapt the company’s Articles of Association to
the new act. This would require, among other things, that a consolidated balance sheet be prepared. Since Fagersta, Bergvik och
Ala and Hammarforsen had their book-closing on December 31,
Industrivärden’s financial year was changed so that it also corresponded to the calendar year. In addition, it was decided to redeem
the company’s preferred stock in order to break off Industrivärden’s
ties to Handelsbanken, which had been criticized by the Bank In-
45
Ernfridh Browaldh, President of
Handelsbanken, Vice Chairman of
LM Ericsson, and subsequently
Chairman of the Board of
Industrivärden.
spection Board Office. The decisions were made at two consecutive
general meetings in November and December 1947.
As a further measure for segregating Industrivärden from Handelsbanken, the company acquired its own office premises at Västra
Trädgårdsgatan 7 in Stockholm.
In 1950, the subordinated debentures in Bolinder-Munktell
with a nominal value of sek 5 million were transferred to Handelsbanken, which sold the company to Volvo later in that same
year. In conjunction with this, Industrivärden bought stock in sca
for a nominal value of sek 5 million as part of an agreement with
Handelsbanken. After the other shares in sca were sold to Handelsbanken’s common shareholders, sca was thereby no longer a
subsidiary of Handelsbanken.
In order to reduce its debt, Industrivärden sold a block of shares
in Fagersta, which thereby ceased to be a subsidiary. In addition,
most of the Class b stock in LM Ericsson was sold. At year-end
1950, Industrivärden’s liabilities amounted to 46 percent of the book
value of the equities portfolio, which corresponded to roughly 30
percent of the calculated market value.
46
Seemingly low level of activity during the 1950s
Acquisition of Gullhögen, purchases of stock in engineering and forest companies
a comparison of Industrivärden’s equities portfolio at the end
of 1949 and 1959 shows that numerous transactions were carried out
even during the seemingly calm 1950s.
Gullhögen
The acquisition of a majority shareholding in Gullhögens Bruk in
1959 can be seen against the background of an interest to broaden
Industrivärden’s operations and through issues in kind to create
large shareholdings that could form the basis of a voting majority at
Industrivärden’s annual meetings. Since Industrivärden’s establishment, there was namely no dominant shareholder in the company.
Gullhögens Bruk conducted cement manufacturing in Skövde,
Sweden, and accounted for nearly 20 percent of total cement production in Sweden, with good profitability. The company was wholly owned by the Wingårdh family. Industrivärden
bought 77 percent of Gullhögen’s stock, while the
remaining 23 percent was owned by the company’s president. As payment, Industrivärden
issued 40,000 new shares, of which some
were sold to sca’s pension funds. Consideration for the purchased stock was
slightly more than sek 14 million.
LM Ericsson
In Ericsson’s new issue carried out in 1955,
Industrivärden subscribed for all of the
Class a shares that it had been allotted
and made complementary purchases of
Class A shares, while the company gradually sold all of its Class
b shares. However, due to the large difference in voting power between the Class a shares and Class b shares, Industrivärden’s share
of the votes in LM Ericsson was not noticeably affected.
47
Excerpts of minutes from board
meetings in 1959.
Large stock transactions during the 1950s:
Number of shares
Dec. 31, 1949
Number of shares
Dec. 31, 1959
Fagersta
100,000 A
50,000 B
170,000 A
10,000 B
Sales 1950;
not a subsidiary from 1950
onwards
Bonus issue 1956
Hammarforsen
30,039
40,584
Purchased in 1959
Gullhögens Bruk
--
76,694
Purchased in 1959;
new subsidiary
Almedahl-Dahlsjöfors
34,810
70,490
Purchases in 1952 and 1959
Bergvik och Ala
60,000
175,000
Bonus issues 1951 and 1954;
purchase 1958
Borås Wäfveri
--
15,000
Purchases 1958 and 1959
L M Ericsson
221,780 A
122,400 B
400,000 A
--
Bonus issue 1951; new issue
1955 and successive purchases
of A-shares;
sale of all B-shares
Kilsund
3,000
4,500
Bonus issue 1951
Svenska Gasaccumulator (AGA) - -
15,522
Purchases 1957-59
Svenska Cellulosa (SCA)
--
160,000
Purchases 1950 and 1957;
Bonus issues 1951 and 1955
Svenska Metallverken
--
40,605
Purchases 1956-59
Company
Comments
Subsidiaries
Other companies
Svenska Gasaccumulator (AGA)
The matter of buying stock in aga was taken up for consideration
in connection with a combined bonus issue and new issue carried
out by the company in 1957. Industrivärden’s chairman, Ernfridh
Browaldh, had been a director on aga’s board for several years and
had good insight into the company’s business. Through purchases of
subscription rights, fractional scrip certificates and stock, approximately 9,000 shares were acquired, which were increased to roughly
15,500 shares through complementary purchases in 1958 and 1959.
48
SCA
Industrivärden made its first purchases of stock in sca in 1950
in connection with the transfer of subordinated debentures in
Bolinder-Munktell to Handelsbanken in exchange for shares in
sca corresponding to 10 percent of the capital stock. When sca
carried out a new issue in 1955 to acquire Kungsgården-Marieberg,
Industrivärden’s ownership decreased proportionally, so complementary purchases were made in 1957 to bring its ownership back
up to the original share of capital.
Svenska Metallverken
In 1955 Industrivärden subscribed for shares without preferential
rights in Metallverken’s ongoing new issue, but without result. In
the years that followed, successive purchases of stock were made,
bringing Industrivärden’s shareholding to slightly more than 40,000
shares. Industrivärden did not conduct any in-depth analysis of
Metallverken, since the company was a major customer of Handelsbanken and thus the chairman and president were highly familiar
with the company.
Detailed documentation
All of the company records from Industrivärden’s establishment in
1943 through 1962 are archived in bound books that include minutes
from annual shareholder meetings and board meetings with extensive appendices, annual reports for Industrivärden and its subsidiaries, and registers of boards of directors and earnings reports for
the portfolio companies. The calculated market value of the equities portfolio was provided for each year, but was not published.
Extensive comparisons were made on a regular basis between
Industrivärden and the other major holding companies – Investor,
Providentia and Custos.
The Board paid visits to one or more of the portfolio companies
on a regular basis in connection with its autumn board meeting.
Normally, two to three board meetings were held each year.
49
Engineering stocks complemented through acquisition
of PLM in 1960 and Bahco in 1961
Portfolio expanded with several engineering stocks
at the end of the 1950s, Industrivärden’s equities portfolio included engineering stocks only in aga, LM Ericsson and Svenska Metallverken, which together accounted for 18 percent of the
calculated market value in 1959. The Board wanted to bring about
a differentiation in the equities portfolio by acquiring stock in additional engineering companies.
In connection with a planned structural streamlining in the
packaging industry, in 1960 Industrivärden was offered to buy a
block of shares in ab Plåtmanufaktur (plm). According to the
plans, plm would acquire the Surte and Hammar glassworks,
which would enable the company to significantly streamline its production as well as sales. Payment for the glassworks would be made
in the form of newly issued stock in plm, which the owners of the
glassworks wanted to sell. Industrivärden financed its purchase of
plm by selling stock in Fagersta and Bergvik och Ala. In connection with this, a small block of shares in plm could be transferred
from Hindus to Industrivärden.
Industrivärden had thereby acquired its first equity stake in
plm, which would eventually become a wholly owned subsidiary, in
1987 (see page 87).
ab Bahco, which was active in ventilation equipment and hand
tools, carried out a new issue in 1961, whereby Industrivärden was
offered to buy subscription rights corresponding to 7 percent of the
stock in the company. The sellers of the subscription rights were
the Hjorth and Duhs families, which had a dominant position in
Bahco. Industrivärden financed its purchase of Bahco shares by selling stock in sca and Fagersta.
In 1986, Investment ab Promotion (see page 54) would make a
bid for all of the shares in Bahco and subsequently change its name
to Investment ab Bahco. Industrivärden, in turn, made a bid for all
of the shares in Investment ab Bahco in 1991. The relationship had
thereby come full circle.
50
Excerpts of minutes from
board meetings in 1960
addressing the purchase
of stock in AB Bahco (top)
and AB Plåtmanufaktur
(bottom).
51
ITT sells its shareholding in LM Ericsson 1960
After 30 years of discord, ITT divests its holding
ivar kreuger’s death in 1932 (see page 22) left both LM Ericsson and itt in an entangled mess. itt had a large shareholding in
lme, but as a foreign owner could not hold more than 20 percent of
the votes. Following the bankruptcy of Kreuger & Toll, an agreement was reached whereby itt refrained from making its claim on
the bankruptcy estate in exchange for lme amending its articles
of association to allow itt to own up to 35 percent of the shares,
which was approved by the government in 1933.
What followed was a long period of discord within Ericsson’s
board. It was not until 1960 that itt agreed to sell is stock in lme.
As stated in a press release, “It has been possible to acquire itt ’s
entire shareholding in LM Ericsson. The Class b shares included in
the holding have been placed on the foreign market, and the Class
a shares are in safe hands in Sweden.”
Under the terms of the deal, which was reached through
mediation by Marcus Wallenberg of Stockholms Enskilda Bank,
178,500 Class a shares were to be taken over by Industrivärden, of
which 100,000 of these would be sold to the general public under
Handelsbanken’s direction. The remaining 78,500 shares would
be kept by Industrivärden until further notice. A small portion of
these were also offered to the general public, which had shown
keen interest in buying stock in lme, while most were transferred
to Handelsbanken’s pension foundation. For Industrivärden, the
acquisition and sale of the lme shares generated a substantial net
profit.
52
Excerpt of minutes from a board meeting
in 1960 concerning ITT’s sale of its shareholding in Ericsson.
53
Promotion established 1962
New business opportunities opened through Promotion
the formation of Investment ab Promotion in 1962 can be
seen against the background of the difficulties that existed for
family-owned companies to convert stock in their companies to
more easily realizable value. To create such opportunities, Industrivärden came up with a plan, whereby a new holding company “of
a promotional character” would be established – called Promotion
– and that this holding company would take over all of the shares
in the family companies Optimus and Svenska Elektromagneter.
In addition, Promotion would acquire substantial blocks of listed
stock from Industrivärden and Handelsbanken’s pension foundation, including a sizable shareholding in Industrivärden. The voting
majority in Promotion would be placed with Industrivärden and
related interests through shares with strong voting power.
The family-owned company ar Bildt & Co., which had a large
shareholding in Optimus, changed its name to Promotion and carried out a new issue in which stock in a number of listed companies
was transferred to Industrivärden as capital contributed in kind. At
the same time, Industrivärden carried out a new issue which gave
Bahco, as a minority owner of Optimus, the right to subscribe for
shares in exchange for shares in Promotion.
In connection with this, Industrivärden’s shareholders were offered the right to subscribe for shares in Promotion at a favorable
price.
To complement Promotion’s equities portfolio, Industrivärden
transferred stock in a number of companies, including AlmedahlDahlsjöfors, Bahco, Bergvik och Ala, Billerud, Fagersta, Husqvarna,
Industrivärden, Stockholms Bryggerier, Svenska Metallverken,
Svenska Handelsbanken and Tirfing.
The transactions were carried out in accordance with the terms
outlined above, and Investment ab Promotion was listed on the
stock market in 1963.
54
A memo from an extraordinary
general meeting on October
19, 1962, describing the terms
of Industrivärden’s involvement
in Promotion.
For Industrivärden, the transactions entailed the sale of listed
stocks with a market value of sek 11 million, while Industrivärden
received stock in Promotion worth sek 9 million along with liquid
assets worth sek 15 million, and its restricted equity increased by
sek 16 million.
55
Major equity transactions in 1963 and 1964
Reymersholm exchanged for Gränges, and Hammarforsen for SCA
boliden had expressed a keen interest in acquiring Industri­
värden’s shares in the holding company Regia, which was the sole
owner of all of the shares in Reymersholm. As payment, Boliden
offered to pay partly in cash and partly in Grängesberg-Oxelösund
shares. In addition, Industrivärden was ensured the right to acquired shares in Boliden. The deal was reached in 1963.
Hammarforsens Kraft, which had been broken off from sca in
connection with Industrivärden’s formation in 1943, was owned to
97 percent by Industrivärden following complementary purchases.
In 1963 sca sought to combine its subsidiary Bålforsens Kraft with
Hammarforsen. Payment was made in newly issued sca stock
along with cash and subordinated debentures issued by Bålforsen.
At Industrivärden’s board meeting in November 1964, it was
announced that Promotion – since its stock market introduction
and in accordance with the company’s plan – had acquired majority shareholdings in a number of family-held companies, namely,
the auto dealership Bil & Truck, the garbage collection company
Sellbergs, the wooden house manufacturer Åsedahus, and Svenska
Tempus, which manufactured fire extinguishing equipment.
Excerpt of minutes from
a board meeting in 1963
concerning the sale of
the majority shareholding
in Hammarforsens Kraft
AB to SCA.
56
John Mattsson Byggnads AB acquired 1965
JM becomes wholly owned through issue in kind
in 1965, building contractor John Mattsson wanted to sell all of
his stock in his wholly owned company John Mattsson Byggnads
ab (jm). At the same time, Industrivärden was seeking to increase
its interests in the construction industry through the acquisition of
a large, well managed construction company.
jm had shown good profitability for a number of years and was
very well consolidated, with large surplus values in ongoing construction projects and own properties.
The purchase price was set at sek 27 million and took jm’s
surplus value into account. According to the purchase agreement,
payment would be made either through a combination of cash
and subordinated debentures in Bålforsen, which Industrivärden
had acquired in 1963 through the divestment of Hammarforsen, or
through newly issued Class c stock carrying one-tenth of a vote
per share. At Industrivärden’s 1966 Annual General Meeting, it was
resolved that payment would be made in accordance with the latter
alternative following an amendment to the articles of association.
In 1966, jm acquired all of the shares in Bergendahl och Höckert, a company engaged primarily in civil engineering work. Later,
Industrivärden also acquired Byggnads ab Harry Karlsson, which
was active in southern Sweden.
Excerpt of minutes
from a board
meeting in 1965
addressing the
acquisition of JM.
57
Wifstavarf deal 1965
Bergvik och Ala sold through share swap; SCA acquires Wifstavarf
in 1965 industrivärden sold its entire shareholding in Bergvik
och Ala to Investor in connection with sca’s acquisition of all of
the shares in Wifstavarf. sca paid for its Wifstavarf shares with
newly issued Class b stock, a promissory note and cash. Investor,
which was the principal owner of Wifstavarf, received stock in
Bergvik och Ala in exchange for the newly issued shares in sca.
The motivation for this deal was that sca would gain substantial integration benefits from the acquisition of Wifstavarf, whose
plants in the Sundsvall area and forest assets in the Västernorrland
and Jämtland counties were adjacent to sca’s.
Industrivärden thereby divested its entire shareholding in Bergvik och Ala, which had been in the company’s stock portfolio since
its establishment in 1943.
58
A press release announcing the sale of
the shareholding in Bergvik och Ala.
59
Collaboration between Gullhögen, Ytong and Durox
Gullhögen acquires Gullfiber; collaboration with Ytong ends
in an effort to diversify its operations, in 1965 Industrivärden’s
subsidiary Gullhögen acquired an equity interest in Billesholms
Glasulls ab, which was reorganized as Gullfiber. The French company Saint Gobain was a minority shareholder of Gullfiber, with 40
percent of the stock.
In 1966 the cement company Gullhögen established a collaboration with the lightweight concrete company Ytong in an effort
to strengthen Gullhögen’s position in the market. As lightweight
concrete manufacture is based on both cement and limestone, this
would enable Gullhögen to become specialized also in limestone
production. A valuation of the two companies showed that they
were virtually equal in value. As a first step, the two companies
acquired minority shareholdings in each other.
Through a merger in 1968 with the state-owned lightweight
concrete company Durox, Ytong became the market leader and was
able to reap significant coordination benefits. After the acquisition of Durox, Industrivärden remained the majority owner in the
Gullhögen group, with Ytong, the Swedish state and a few private
individuals as minority owners.
In 1970 the group was further restructured, whereby Gullhögen
acquired Saint Gobain’s stock in Gullfiber in exchange for newly
issued shares in Gullhögen. Industrivärden continued to hold a
majority interest, with 51 percent of the votes.
The reciprocal minority ownership between Gullhögen and
Ytong was dissolved in 1972 after it was shown that the coordination benefits between the two companies were considerably smaller
than anticipated.
60
Building supplies company O&R acquired 1970
O&R’s landholdings attractive for JM
olsson & rosenlund was a family-owned building supplies
company with large landholdings zoned for construction. The company also conducted property management and lending to building
contractors. Its ownership was spread among many heirs to the
company’s founder, who wanted to sell their company.
Industrivärden offered to acquire Olsson & Rosenlund in
exchange for subordinated debentures in Bålforsen (which Industrivärden had received in connection with the divestment of Hammarforsens Kraft in 1963), shares in a number of listed companies,
including sca, LM Ericsson, Fagersta, plm and Promotion, a
promissory note and cash. The chief aim of the acquisition of
Olsson & Rosenlund was to acquire development land for jm.
The parent company of the new group was jimor, with jm,
Olsson & Rosenlund and Gullfiber as group companies.
Organizational
chart published in
Industrivärden’s 1977
Annual Report.
61
Gullhögen sold 1973
Gullfiber becomes subsidiary after Cementa acquires Gullhögen
in 1973 cementa sought to acquire Gullhögen in order to bring
about a structural streamlining in the cement industry. Gullhögen
had acquired substantial overcapacity following the installation of
a newly built, efficient blast furnace for dry manufacture of cement, while Cementa had several older manufacturing plants with
high operating costs. A merger between the two companies would
thereby lead to mutual benefits.
An agreement was reached in August 1973 under which Cementa acquired Gullhögen, which prior to this had divested the insulation material company Gullfiber to Gullhögen’s former shareholders. The net consideration was paid in cash and promissory notes.
Saint Gobain stayed on as a minority shareholder of Gullfiber,
with just under 40 percent of the capital.
Swedish business weekly Affärsvärlden (no. 22/1973) commented
on the low level of activity in Industrivärden’s portfolio during the
1970s. The headline reads: “Nothing new from Industrivärden.”
62
Gullfiber’s fiberglass building
insulation material.
Picture from Industrivärden’s
1985 Annual Report.
63
Industrivärden’s investment policy 1976
Guidelines highly relevant even today
Per Lindberg,
President from 1976 to 1986
in a memo to the Board in 1976, Industrivärden’s president at the
time, Per Lindberg, laid out guidelines for Industrivärden’s investment policy. These guidelines are still highly relevant today.
Industrivärden was established in 1943 when Handelsbanken
transferred certain major shareholdings that had come into the
bank’s ownership to protect distressed credits. Several of Industrivärden’s major shareholdings in 1976 dated back to Industrivärden’s formation, including LM Ericsson, sca and Fagersta.
The shareholding in sca had grown in connection with the divestments of Bergvik och Ala and Hammarforsens Kraft, which were
part of the original equities portfolio. Promotion could be traced
to the original holding of Almedahl-Dahlsjöfors, while the holding in Boliden could be traced to Reymersholm. Industrivärden’s
shareholdings in these companies had formed a natural foundation
for board representation. Other companies in which Industrivärden
had large shareholdings and had board representation were aga,
Bahco, plm and Svenska Handelsbanken. Companies in which Industrivärden had participated in their creation and thereby become
intimately tied with were Promotion and Beijerinvest.
Per Lindberg stated: “In the companies in which Industrivärden
is a dominant owner, it is natural to feel a special ownership responsibility and regard the shareholding as a long-term commitment.
Active ownership responsibility also entails participating in structural measures that can improve long-term competitiveness, such
as in the cases of Hammarforsen/Bålforsen/sca, Bergvik och Ala/
Wifstavarf/sca, Reymersholm/Boliden, Metallverken/Gränges,
Gullhögen/Cementa and Probo/Beijerinvest.”
The shareholdings in most of the portfolio companies could
be regarded as strategic and long-term. Industrivärden’s earnings
were thus primarily dependent on its ability to participate in the
adept management of the companies in which Industrivärden could
exercise influence.
64
An excerpt from Per
Lindberg’s memo on
Industrivärden’s investment
policy.
As Per Lindberg summed up: “An investment policy with the
recommended focus is compatible with the shareholders’ demands
for a long-term favorable return and meets the requirements for
security as well as dividend growth. Stable ownership is beneficial
for all parties.”
65
Fagersta divested 1978
Original holding exchanged for stock in Sandvik
industrivärden’s shareholding in the steel company Fagersta dated back to the company’s establishment in 1943 and had
changed only marginally over the years through purchases of Class
a shares and sales of Class b shares.
Profitability in the Swedish steel industry was weak during the
1970s, and negotiations were held between Fagersta, Gränges, skf
and Uddeholm in an effort to improve the structure of the industry.
Sandvik had many common points with Fagersta but did want to
bind itself to additional steel production in Sweden. In this situation, Kinnevik (Sandvik’s dominant shareholder) took up contact
with Industrivärden to acquire the shareholding in Fagersta in
order to create conditions for closer cooperation between Sandvik
and Fagersta.
The industrial synergies between Fagersta and Sandvik revolved
around a joint investment in a string forging plant, which could
thereby achieve full capacity utilization. Certain product exchange
in the areas of stainless steel wire and tool bits would also be made
possible, as would development of bimetal technology. Coordination would also be possible in the areas of welded pipes and rock
drills.
Following negotiations, an agreement was reached with Kinnevik in autumn 1978 on the sale of the Fagersta holding in two
blocks in exchange for Sandvik stock.
66
The company Trend Invest
made aggressive pur­
chases of stock in Fagersta
in the mid-1970s, but met
resistance from Industrivärden aside from some
financial difficulties of its
own. The headline reads:
“Trenders in a pinch.”
From Affärsvärlden’s
anniversary book 2001.
67
Fastighets AB Fundament established 1981
Fundament takes over property from JM and O&R
at the start of the 1980s, Industrivärden’s wholly owned operations comprised the jimor group with its three subsidiaries – jm,
Olsson & Rosenlund and Gullfiber – with operations in construction, building supplies and property management. To streamline
these operations, a number of investment properties were transferred from jm and Olsson & Rosenlund to the newly formed company Fastighets ab Fundament. In addition, Olsson & Rosenlund
transferred its substantial holdings of undeveloped land and building sites to jm, whose specialty was “refinement of undeveloped
land to productive investment properties.”
In 1981, jm and Fundament’s property management activities
spanned more than 360,000 square meters, of which more than 90
percent pertained to offices and stores, and thereby made up one of
the country’s largest property portfolios.
This office building in Gröndal, south
of Stockholm, was one of Fundament’s
property holdings.
Picture from Industrivärden’s 1988
Annual Report.
68
Fundament complemented its property
holdings with the
purchase of the
Storgatan 10 prop­
erty in Stockholm,
which has served as
Industrivärden’s head
offices since 1991.
The exterior has since
been renovated and
today has an austere
Art Nouveau façade.
Picture from
Industrivärden’s 1987
Annual Report.
69
JM introduced on stock market 1982
Keen interest in the market for real estate stocks
industrivärden was considering a stock market introduction for either jm or Fundament. jm was believed to have more
development potential, since the company had a large portfolio of
land and real estate for development under own management. In
addition, jm had a solid reputation as a builder and exceptional
know-how with respect to developing projects from undeveloped
land to finished property. Its real estate holdings were among the
largest in the country.
Several other property companies were considering stock
market introductions in autumn 1981. Industrivärden’s shareholders
were therefore offered, at short notice, to subscribe for new shares
in jm at a price that was roughly 20 percent below net asset value.
The motive for the new issue by jm was to provide the company
with greater resources to expand its operations and to give Industrivärden’s owners an opportunity, at favorable terms, to participate
directly in jm’s continued development. Industrivärden owned approximately 70 percent of jm’s stock after the initial public offering,
which was fully subscribed in December 1981.
jm was introduced on the stock market in spring 1982.
70
Press release announcing JM’s stock market
introduction and initial public offering.
71
Indus Innovation established 1984
Venture capital invested in development companies
in 1983 industrivärden involved itself in three small, technology-oriented companies by providing them with venture capital.
Teknikinvest was charged with supporting innovations and upstart
companies with a technological orientation. Cosmotron manufactured hybrid electronics for sale in the security equipment market.
inor manufactured electronic components for various types of
signal handlers.
Through Indus Innovation, which was established in 1984,
Industrivärden would be able to increase its investment in small
and medium-sized technology companies. The main focus was on
high-tech, fast-growing companies with roots in universities and
colleges as well as on electronics companies through collaboration
with engineering colleges. Through long-term minority ownership,
Indus Innovation would be able to offer the companies financing
and active involvement through board work.
The original three investments were complemented in 1985 with
Dustcontrol, active in air filtration, Bewator, focusing on code locks
and passage control, Mydata, a maker of electronics surface mounting machines, and Firmware, a data communications company.
Indus Innovation’s operations were sold in 1988 for a small
profit. The buyers were Nordinvest, a subsidiary of Promotion, and
Incentive.
72
Photo collage showing the various
products made by Indus Innovation’s
associated companies, including products
for control and regulation technology,
systems for clean work environments,
code locks and door intercoms, and surface mounting machines for electronics.
Photos from Industrivärden’s 1985 Annual
Report.
73
Equities portfolio concentrated during 1980s
Some thirty shareholdings reduced to ten
industrivärden’s equities portfolio included seven shareholdings and one convertible debenture upon its establishment in
1944. In the decades that followed, a number of new shareholdings
were added, while all of the original holdings except for Ericsson
and sca were sold in connection with various structural deals.
At the start of the 1980s the equities portfolio comprised more
than thirty different shareholdings. Roughly two-thirds of the value
consisted of stocks that were considered to be associated with a
special ownership responsibility, such as sca, Ericsson, aga, plm
and Promotion. On top of this, Industrivärden had a number of
shareholdings in which its voting share was only a few percent and
consisted of medium-term investments held to generate a high
return.
In the engineering sector, Industrivärden had marginal ownership in Alfa-Laval, asea, skf, Sonesson and Volvo. Industrivärden
also had small holdings in other sectors, such as the forest company
Papyrus, the pharmaceutical company Astra, the industrial companies Gambro, Gullspång and Programator, the property companies Cementgjuteriet and Svea, the trading company Bergman &
Beving, the financial companies SE-Banken and Skandia, and the
In 1991 Industrivärden’s wholly owned
operations accounted for nearly half of
the company’s assets. The box in green
depicts the portfolio of listed stocks,
while the rest pertains to wholly owned
businesses.
74
From 1983 to 1991 the number of shareholdings decreased from more than 30 to
just over ten.
investment companies Argentus, Beijer, Cardo and Dacke Invest. In
terms of value, the largest holding of investment stocks at the end
of 1983 was Astra, worth sek 243 million, and the smallest was in a
company called Hem på landet, worth a mere sek 3 million.
In the decade that followed a dramatic concentration was made
of the number of shareholdings, to where in 1991 the portfolio consisted of only ten holdings, of which six in companies with a special
ownership responsibility, namely, aga, Bahco, Ericsson, Handelsbanken, sca and Skanska. This concentration was a result of the
decision to reduce the number of small shareholdings in listed companies and instead expand the wholly owned businesses, which in
1991 included plm, Inductus, Indutrade and Fundament.
75
Gullfiber split up 1986
Insulation materials business sold; hearing protection and acoustic products kept
In 1986 the Industrivärden Group
consisted of three equities management
companies (in blue at left) and five operating subsidiaries under Inductus.
gullfiber had been a subsidiary of Industrivärden for a number
of years, with the French company Saint Gobain as a large, minority owner. In an effort to refine the business, the owners agreed in
autumn 1985 to split Gullfiber into two parts, with Saint Gobain
keeping the insulation materials part, while Industrivärden kept the
hearing protection and acoustic products businesses, which were
conducted by the companies Bilsom and Ecophon. Industrivärden
also kept the development company Gedevelop.
In connection with this, Industrivärden formed the Inductus
Group, which comprised all of the operating subsidiaries, namely,
Bilsom, Ecophon, Gedevelop, and the property company Fundament. In the years that followed, these companies were sold at
a good profit, except for Fundament, which remained in Industrivärden’s hands until 1997.
Organizational chart from
Industrivärden’s 1986 Annual Report.
76
Purchases of stock in Nils Dacke 1986 and 1989
Acquisition of holding company in southern Sweden
in 1986 Volvo made an offer to Industrivärden to buy a large
block of shares in Nils Dacke in connection with Volvo’s acquisition
of Sonesson, the parent company of Nils Dacke. Industrivärden’s
acquisition initially amounted to just under 50 percent of the voting
power in Nils Dacke.
The Nils Dacke Group consisted of five separate business areas
– Industrial Trading, Plastic Machinery, Hydraulics, Packaging, and
Transport Systems – plus the Boda Scand Group, comprising some
thirty companies mainly in southern Sweden. Since its establishment in 1982 the group had expanded steadily through acquisitions
and new establishment. Profitability was good.
In December 1989 Industrivärden made a bid for the outstanding shares in Dacke, which became a wholly owned subsidiary
in 1990. The industrial trading business was broken off from Nils
Dacke, forming a directly owned subsidiary of Industrivärden called
Indutrade.
AB Nils Dacke’s 1988 Annual Report.
Dacke Handel was the
origin of Indutrade. The
excerpt here describes
Dacke Handel’s operations and customer base,
including companies in
the steel, paper, food,
pharmaceutical and
engineering industries.
77
The Fermenta affair 1986
“Parking” of Fermenta holding becomes several-year involvement
In 1988 the Stockholm Stock Exchange
conducted an extensive investigation into
the course of events at Fermenta. Seen
here is the cover of the report entitled
“Fermenta: facts and experiences.”
industrivärden’s involvement in Fermenta originally concerned establishment of a new industrial structure for biotechnology in Sweden, which was to include the Volvo-controlled companies Pharmacia, Leo, Ferrosan and Cardo, and the Fermenta-owned
companies Pierrel, sds and Cedar. The idea was that Fermenta’s
principal owner, Refaat El-Sayed, would sell his own shares in
Fermenta to Volvo, but instead, he bought shares on the market and
delivered these to Handelsbanken, with which Industrivärden made
an agreement to temporarily “park.” The main reason for El-Sayed’s
actions was that he did not want to reduce his equity in Fermenta.
In January and February of 1986, Industrivärden thereby came
to own sek 511 million in Fermenta stock through its subsidiary
Hindus. Following an agreement in principle between Volvo and
Fermenta, Handelsbanken had made queries as to whether Industrivärden could buy up to two million shares of Fermenta stock on
the stock exchange, which would be subsequently purchased by
Volvo. Industrivärden was led to believe that the deal was risk-free,
that Handelsbanken would arrange the financing and that the
shares would be sold at a price that would cover Industrivärden’s
costs with a certain margin. However, no formal agreement was
drawn up with the bank, despite urgings from Industrivärden. In
essence, Industrivärden had thereby bought the stock to support
Refaat El-Sayed, who was to deliver the Fermenta shares to Volvo.
An agreement was subsequently drawn up with El-Sayed under
which he would buy Industrivärden’s shares in Fermenta before the
end of 1986. As collateral, El-Sayed pledged seven million shares of
Fermenta stock.
In December 1986, Fermenta published a press release based
on a memo from its auditors, who during the preceding months
had discovered step by step that the company’s reported earnings
for 1985 and 1986 were largely fictitious. Loans that were due in
December could not be repaid, and Fermenta was at the brink of
78
suspending its payments. To protect its claim, Industrivärden had
no other recourse than to take over the shares pledged by El-Sayed,
which corresponded to 18 percent of the capital and 43 percent of
the votes in Fermenta. Industrivärden had now become Fermenta’s
principal owner.
Thus began a protracted and costly involvement in Fermenta
which would not come to a conclusion until 1993.
Dagens Nyheter on April 7 and February
6, 1987. The headlines read: “Losses
continue to mount: New fall of the
curtain for Fermenta” and “Fermenta’s
plummet visible in year-end accounts.”
79
INTERVIEW
Bo Söderberg
president of indus innovation 1984–1988
How did you become involved with Indus Innovation?
I was working with small-business matters at what was then the
Ministry of Industry. Per Lindberg, Industrivärden’s President, recruited me to head Indus Innovation, which held minority interests
in technology-oriented small enterprises. In the years that followed,
we made an additional four investments in technology companies.
What can you tell us about how the various companies in Indus
Innovation have performed since your departure?
Bo Söderberg was an Industrivärden
executive from 1984 to 1989, with
responsibility for wholly owned subsidiaries. He served as President of Indus
Innovation from 1984 to 1988 and
President of Fermenta in 1987. Today
Bo Söderberg is a partner in the venture
capital company Nordic Capital. He was
President and CEO of Föreningsbanken
from 1991 to 1997.
The two that have grown the most are Axis and Mydata. Today
Axis is a listed company and a world leader in network video.
Mydata develops and makes surface mounting machines for electronic circuit boards.
At the time, Industrivärden’s wholly owned subsidiaries in the
Inductus Group included Bilsom, a maker of hearing protection,
Ecophon, a manufacturer of acoustic products, and the development company Gedevelop. These three companies had been hived
off of Gullfiber in 1985 when the minority owner Saint Gobain
took over the insulation material business. It also included the
property company Fundament. What can you tell us about the
wholly owned subsidiaries?
Bilsom was a very profitable business that was sold off to a worldleading occupational safety products company, generating a good
profit for Industrivärden. Ecophon was acquired by Saint Gobain.
Gedevelop, which was formed after the closure of Gullfiber’s plants,
was discontinued after a few years. Fundament remained part of
Industrivärden until 1997.
80
In 1986 Industrivärden acquired a large shareholding in Nils
Dacke, with more than thirty small and medium-sized industrial and trading companies. Nils Dacke became a wholly owned
subsidiary of Industrivärden in 1989. How involved were you in
Dacke’s operations?
Industrivärden saw a similarity between Nils Dacke on the one
hand and Inductus and Indus Innovation on the other. I sat on
Dacke’s board for a few years. Dacke consisted of a large number of
small and medium-sized companies in Småland.
I really don’t think that a large holding company like Industrivärden should involve itself in such small companies, which
requires a lot of time and energy.
You were appointed as ceo of Fermenta in 1987 on short notice,
after the former principal owner and ceo, Refaat El-Sayed, was
forced to relinquish his pledged shares to Industrivärden. Describe
the situation at Fermenta when you took over as ceo.
After El-Sayed’s departure I first became a member of the board
and shortly thereafter was appointed as ceo. The situation at
Fermenta was completely chaotic. The company’s assets had been
stated at inflated values and we were forced to make massive writedowns.
An American investment banker named Ari Ganger was
interested in buying Fermenta with a view to selling off its constituent companies. But financing for the deal fell through. A new
board and management were appointed, with Bert Sjölin as the
new Chairman and Bertil Holmberg as ceo. Many more episodes
transpired before Industrivärden’s Fermenta adventure was finally
over in 1993.
81
DACKE
Restructuring of Fermenta
Critical situation requires structural measures
Fermenta’s 1989 Annual Report.
following the catastrophic year in 1986 with a loss of sek
613 million before appropriations and tax, the situation stabilized at
Fermenta in 1987 through the sale of the loss-generating fermentation operation abroad and of the American company Cedar, which
was considered to have major, inherent environmental risks. Fermenta thereafter consisted basically of the Italian company Pierrel
and the American company sds, whose earnings improved considerably following extensive structural measures.
The company’s financial base was strengthened in 1987 through
capital injections – first a directed new issue of sek 250 million to
Industrivärden and some twenty other institutions, and thereafter
concessions on interest payments worth approximately sek 70 million from the banks. In addition, a new issue of sek 330 million was
made to all of the shareholders, which was fully subscribed. Additional new issues were carried out in 1989.
In late 1988 Fermenta acquired the finance group Independent
in an effort to broaden its operations with a consumer-oriented
company with good earnings capacity, and thereby be able to utilize
Fermenta’s loss carryforwards. In early 1990 Independent merged
with the financial group infina. The finance business generated a
substantial loss in 1990 as a result of the deep recession that ensued.
However, through the divestment of sds with a sizable capital gain,
the company managed to report a profit for the year.
In early 1992 Fermenta found itself in a critical situation and at risk
for bankruptcy. Negotiations were then initiated with a bank consortium, which resulted in the consortium taking over the shares in Independent and relieving Fermenta from the venture capital guarantee that
had been made for Independent. As a part of this arrangement, Fermenta took over the property company Elector and a small shareholding in the Spanish property company afisa. In the same year, Elector
declared bankruptcy and most of afisa’s property holdings were sold
for a capital gain. After this streamlining, two pharmaceutical companies remained, and Fermenta began reporting a profit again in 1993.
82
Industrivärden reached its end point in 1993 when its shareholding in Fermenta, which corresponded to 10 percent of the capital
and 49 percent of the votes, was sold to Independent’s bankruptcy
estate for sek 1. In all, the Fermenta undertaking had cost Industrivärden roughly sek 300 million after tax loss carryforwards.
Interview with Börje Nordenö
When you took over as ceo of Fermenta in 1992, the company had
reported a loss for 1991 of sek 1.2 billion, mainly pertaining to loan
losses and write-downs in Independent. How was Fermenta’s situation when you took office?
The finance and real estate sectors were in a state of crisis, which
made it natural to concentrate on pharmaceuticals. Fermenta had
issued a venture capital guarantee for Independent, which put it
in a stranglehold. We carried out intensive negotiations with the
banks, which in the end took over the shares in Independent and
released Fermenta from its venture capital guarantee, in exchange
for Fermenta acquiring the property company Elector and a shareholding in the Spanish company afisa.
The real estate business also had problems. What can you tell us
about that?
A liquidation balance sheet showed that more than half of Elector’s
capital stock had been used up. A great effort was made to solve
the problems, but the banks pushed for bankruptcy. Fermenta succeeded in reaching an agreement to sell most of afisa’s property
holdings to a Spanish property company, for a considerable capital
gain. The shares in afisa were subsequently sold.
Industrivärden ended its involvement in Fermenta in April 1993 by
selling its stock to Independent’s bankruptcy estate for one krona.
How would you sum up that deal?
After the restructuring in 1992/93, the risk for bankruptcy had been
removed. Remaining in Fermenta were an American veterinary
medicine company and a Swedish pharmaceutical company. Fermenta was in good shape and generated a profit following years of
losses. Industrivärden could thereby conclude its Fermenta adventure without suffering additional costs.
83
Börje Nordenö, with a long history
at SCA – most recently as President
of SCA Packaging – was CEO of
Fermenta from 1992 to 1994. Today
he serves as Chairman and Vice
Chairman of various companies
in the engineering and real estate
sectors.
Shareholding in JM sold to Skanska 1987
JM exchanged for Skanska – complementary purchases made in 1998
in 1987 skanska acquired Industrivärden’s Class a shares in jm
in exchange for newly issued Class a shares in Skanska, which
corresponded to 8 percent of the votes in Skanska. At the same
time, Skanska acquired Industrivärden’s Class b shares in exchange
for cash. jm’s other shareholders were offered to sell their shares at
corresponding terms. jm thereby became a wholly owned subsidiary of Skanska.
Industrivärden’s shareholding in Skanska was subsequently
expanded through complementary purchases. Industrivärden has
been the company’s largest shareholder since 1998.
Excerpt from Industrivärden’s 1987 Annual
Report describing the sale of JM stock.
Industrivärden purchased its
first stock in Skanska in 1987.
Following another large purchase
in 1998, Industrivärden became
Skanska’s largest owner.
The headline from Swedish business
daily Dagens Industri in 1998 reads:
“Industrivärden takes over Skanska.”
84
INTERVIEW
Sven Hagströmer
Looking back at 1995, could you shine some light on when
Öresund took control of Custos, which had large shareholdings in
Skanska and sca?
Bo Rydin and Carl-Erik Feinsilber had been holding secret meetings with Öresund. Carl-Erik, who had been my boss at Gränges,
vouched for Öresund as a new, major owner of Custos, and Industrivärden could thereby help us acquire a large block of shares in
Custos.
During this period, how did the cooperation work with Industrivärden, which was also a large shareholder of Skanska and sca?
The cooperation with Industrivärden worked absolutely fine, even
though we didn’t always have the same agenda.
Sven Hagströmer is Chairman of Investment AB Öresund, Avanza Bank and
eWork Scandinavia, and a director on the
board of Bilia.
Could you describe the background
to when Custos sold its shareholding in Skanska to Industrivärden
and Inter Ikea in 1998?
Skanska owned large shareholdings
in Sandvik, skf and Graninge, and
was somewhat of a holding company. Industrivärden and Custos
advocated a concentration on the
construction business, and we
agreed entirely that a new strategy
should be charted out for Skanska.
There was some turbulence in the board work, since Skanska
was not used to strong owners, and it wasn’t all that easy to pursue
our agenda.
Custos’s sale of its shareholding in Skanska in 1998 took place
mainly in light of the downturn in the construction industry.
85
Swedish business daily Finanstidningen,
March 18, 1998: “Robur decisive factor
in battle for power over Skanska.”
Swedish daily newspaper
Dagens Nyheter, September
29, 1998: “Custos parts with
Skanska.”
Custos remained a large shareholder in sca until 2001. How well
did it cooperate with Industrivärden as the principal shareholder?
Custos recommended a differentiation of sca into personal care
products, packaging and forest products. As the principal owner,
Industrivärden listened to our reasoning, but argued against it. But
there were no problems with the cooperation.
For a short time around the turn of the century, Öresund was Industrivärden’s second largest shareholder. Why did it sell its entire
shareholding?
Finanstidningen, January 20, 2000:
“H&Q exits Industrivärden.”
I have always had an interest in the telecom sector
and had a hard time understanding the phenomenal growth in Ericsson’s share price in 1999 and
2000. When I saw that Ericsson was unprepared
for the impending sharp downturn in the telecom
sector, I felt it was time to sell the holding in Industrivärden, whose
portfolio at the time was entirely dominated by Ericsson. We made
a very good deal by selling at the right time!
You worked in Gränges’ finance department in the early 1970s
under the direction of Carl-Erik Feinsilber. What was your impression of Feinsilber, who went on to become ceo of Promotion,
Bahco and Industrivärden?
My first job was in Gränges’ finance department, and Carl-Erik
was my boss. We were responsible for managing a small portfolio of
equities, which ended up generating handsome returns. Carl-Erik
was a good boss, who always took responsibility for his employees’
decisions. He also gave us feedback on our work.
86
Bid for PLM 1987
Industrial operations expanded through acquisition of PLM
in the mid-1980s Industrivärden’s board had decided that the
company would strengthen its strategic equities portfolio, expand
the portion of wholly owned subsidiaries with industrial operations,
and build up a small, short-term investment portfolio.
Against this backdrop, it was natural to make a bid for the
outstanding shares in the packaging company plm. Since the price
of Industrivärden’s stock had performed well in relation to net asset
value in 1987, it was possible to finance the acquisition through the
issuance of convertible participating notes (cpn’s), the interest of
which was tax-deductible. After the acquisition, just over 30 percent of Industrivärden’s net asset value consisted of wholly owned
industrial and trading operations and approximately 10 percent of a
wholly owned property business.
The bid to plm’s shareholders entailed that they would receive
13 cpn’s for each full block of ten shares, whereby Industrivärden
issued four series of cpn’s (a restricted, b unrestricted, c restricted
and c unrestricted). Each cpn could be converted to one share of
stock in the corresponding series. All of the cpn’s had a term of
40 years and paid interest corresponding to 115 percent of the share
dividend. The offer represented a premium of roughly 30 percent
over the most recent share price.
The cpn’s could be reported at their nominal value, and thus no
goodwill had to be reported on Industrivärden’s consolidated balance sheet. The total cpn loan amounted to sek 1,048 million.
At an extraordinary general meeting in November 1987, the following rationale was given for the deal: Industrivärden was seeking
to acquire plm because the portion of operating subsidiaries, which
the board wanted to expand, had decreased after the successive divestment of jm and the sale of a large part of the Gullfiber Group.
plm was currently in a turnaround situation following a few years
of falling profitability and would benefit from stable ownership
with adequate financial resources to carry out profitable structural
87
Prospectus on the offering to PLM
shareholders in fall 1987.
measures. One example of such a measure was the 1987 acquisition
a 50 percent stake in plm’s Berlin plant, which was owned by the
American packaging company Ball.
A cpn can be described as a sort of financial hybrid that is
very similar to owning an ordinary share of stock: the cpn’s price
mirrors the share price by virtue of its very long term, the interest
it pays is coupled to the stock price, it is priced in Swedish kronor,
and it can be converted to stock at any time. For Industrivärden as
the issuer, the cpn’s had the advantage that their interest was tax
deductible and they could be issued without dilution even when
Industrivärden’s stock was trading at a discount, which is normally
the case for stock in a holding company.
The prospectus published in connection
with the bid for PLM in 1987 included a
detailed explanation of how a CPN works.
88
Sudden CEO change in 1989
“Sailboat affair” leads to replacement of CEO
in october 1989 it was announced that CarlErik Feinsilber had been appointed as the new
ceo of Industrivärden after Kjell Brändström had
left his post for personal reasons.
In a separate press release from sca, where
Brändström had previously been employed, it
was stated that Brändström had bought a sailboat from sca through a relative. Despite the
sale, sca continued to bear all of the costs for the
sailboat for several years thereafter, without sca’s
approval. Industrivärden’s Chairman, Bo Rydin,
who was also Chairman of sca, had thereby lost
confidence in Brändström.
Charges for gross breach of faith were brought
against Kjell Brändström as a result of numerous
other questionable transactions. However, Brändström was acquitted of the charges in a district
court ruling in 1991.
An article in Swedish business
daily Dagens Industri in 2001
taking a retrospective look at the
dismissal of Kjell Brändström with
the headline: “The hit came at
the top.”
Excerpt from press release published by Industrivärden
on October 27, 1989, announcing the appointment of
Carl-Erik Feinsilber as CEO following Kjell Brändström’s
departure.
89
INTERVIEW
Lars Bertmar
executive vice president 1988–1990
You are said to be the “father” of the convertible participating note
(cpn), which came to be a popular form of financing. Tell us about
the advantages of this financial hybrid that Industrivärden used to
finance the acquisition of plm.
Lars Bertmar served as CEO and
Chairman of Carnegie from 1990
to 2006. Today he is Chairman
of Catella, a financial group that
specializes in asset management
and financial consulting.
Handelsbanken created the cpn because of double taxation. We
devised a fixed-income security that behaved like stock, since the
interest it paid was tied to the share dividend. Since stock essentially has a perpetual term, we set the longest term for the cpn’s that
was legally possible, or 40 years.
A cpn was a general instrument that was very suitable for
a holding company like Industrivärden and which enabled the
financing of the plm acquisition at favorable terms. cpn’s were
classified as equity on the balance sheet at the same time that the
interest paid on them was tax deductible. Should the stock dividend
be canceled, the cpn interest would also be zero.
The problem was that, in the general debate, cpn’s came to be
called nonvoting stock. In the press, cpn’s therefore were portrayed
as a power instrument, and certain institutions spoke negatively
about cpn’s as a form of financing. As a result of this criticism,
cpn’s were never any success and were issued only by companies
with ties to Handelsbanken.
As a result of changes in the tax code, cpn’s have become outdated.
What is your view in general of the concept of nonvoting stock?
Nonvoting stock exists in several countries and is actually suitable for the large majority of investors who view equities only as a
financial investment and thus are not interested in participating in a
company’s affairs.
90
In Industrivärden’s 1989 Annual Report you
wrote an award-winning article about Industrivärden’s value. You described how net asset
value was calculated, which under today’s rules
is shown directly on the balance sheet for a pure
holding company. You also pointed out the financial and tax advantages for a mixed holding company under the tax rules that applied at the time.
Where do you stand in relation to pure and mixed
holding companies with the rules that apply today?
Under the tax code at the time, mixed holding companies had clear
benefits with respect to intra-group transfers of profits. In order for
a holding company to have wholly owned subsidiaries today, a condition is that it can manage its subsidiaries better than a traditional
industrial company can.
What is your general view about holding companies compared
with equity funds?
If a holding company has such transparent shareholdings that its
value can be determined at any point in time, then it is basically the
same as a closed-end mutual fund, which is normally considered to
be less attractive.
What’s most important for a holding company is to deliver a
total return that is better than the market. The discount to net asset value doesn’t matter in this context, since it is always the share
price performance including reinvested dividends that is measured
in relation to the return index. On the other hand, naturally the
discount to net asset value entails that new issues normally cannot
be justified.
Many holding companies, including Industrivärden, have considerably lower management costs than mutual funds. This is a key
factor behind the differences in long-term returns. Moreover, if a
holding company’s stock has good liquidity – as in Industrivärden’s
case – then overall, buying stock in a holding company is a practical
and simple investment alternative that offers the opportunity for
better returns than mutual funds.
91
Industrivärden’s 1989 Annual Report
featured an award-winning article on the
calculation of net asset value by Lars Bertmar, entitled “Industrivärden’s Value.”
Bid for Bahco 1991
Industrivärden complemented with Bahco
The cover of Investment AB Bahco’s 1990
Annual Report depicts the 12 companies
– or building blocks – that made up the
group at the time.
Prospectus for the offering to the shareholders of Investment AB Bahco in 1991.
in october 1991 Industrivärden made a bid for the outstanding
shares in Investment ab Bahco, corresponding to 60 percent of the
votes and 73 percent of the capital.
At the time, Bahco had a portfolio of listed stocks work approximately sek 1.3 billion and nine industrial companies after it
had sold three engineering companies earlier in 1991. The aim was
that Dacke’s and Bahco’s industrial operations, together comprising 14 industrial companies, would be combined in a single unit
called Inductus. Over time the number of industrial companies
would be reduced through divestments and mergers. In addition,
management of the listed stocks would be coordinated with Industrivärden’s equities management with the intention of gradually
divesting most of Bahco’s equities portfolio. After raising its bid by
10 percent, Industrivärden succeeded in acquiring all of the shares
in Bahco in early 1992.
The starting point for Inductus was that the group, within three
years, would consist of a maximum of eight companies in one or
two sectors. The requirements for the constituent companies were
significant size, an independent organization, a market leading
position and international operations.
Excerpt from the construction trade magazine
Byggindustrin in August 1995. The headline
reads: “Loaded merger,” referring to the merger
between Thorsman and Wibe.
92
Following the sale of nine companies from 1991 to 1993, remaining in Inductus were the door automation company Besam, the
window manufacturer ElitFönster, the stapler manufacturer Isaberg
Rapid, Thorsman, active in installation materials and systems, and
Wibe, active in cable trunking, ladders and masts.
ElitFönster merged with the Skanska-owned company Myre­
sjöfönster in 1995, after which Industrivärden sold its stock in the
merged window company in 1996.
Thorsman and Wibe were combined to form a single group
in 1995, after which Besam, Isaberg Rapid and Thorsman became
directly owned subsidiaries of Industrivärden.
Carl-Erik Feinsilber, President and
CEO from 1990 to 1994. During
Feinsilber’s tenure, Industrivärden
acquired Bahco and a large shareholding in SSAB, while PLM was
restructured and a definitive end
was reached for the involvement in
Fermenta.
Presentation of Inductus from
1993 brochure.
.
93
PLM gradually restructured 1992–1994
Concentration on glass packaging and beverage cans
in order to strengthen plm’s position, a decision had been made
to continue the company’s concentration primarily on glass packaging and metal beverage cans. Further expansion would be pursued
in Europe to achieve strong market positions in prioritized regions.
An investment was made in a can factory in La Ciotat, France, for
approximately sek 700 million, and another sek 60 million was
invested in a lid manufacturing plant in Recklinghausen, Germany.
Production started in 1992.
Sharply falling demand in the German market as a result of
growing unpopularity of disposable packaging and requirements for
recycling systems led to a temporary closure of production lines in
1992. Lower demand and subsequently lower prices led to a reduction in beverage can manufacturing.
Headline in Swedish
daily newspaper Dagens
Nyheter, February 1995:
“PLM reliable winner.”
In 1994 the unprofitable Austrian beverage can manufacturer
Austria Dosen was acquired in exchange for taking over the company’s liabilities. The acquisition was a good fit for plm’s strategy to
increase the manufacture of beverage cans in Central Europe, and
Austria Dosen thus proved to be a valuable contribution.
plm’s tin can division was sold in 1994 to the Danish company
Glud & Marstrand, for a good profit. plm had thereby concentrated its operations on packaging for the European beverage industry.
94
The President’s statement in PLM’s 1994 Annual Report describing
the core of PLM’s business – beverage packaging.
95
Purchase rights in SSAB acquired 1992
Swedish State offers shares in SSAB
in 1992 the Swedish State offered interested parties to buy
purchase rights in ssab Svenskt Stål ab and related government
bonds that could be immediately sold. Industrivärden’s investment
in 2,590,000 purchase rights amounted to sek 7 million. The grant
was made on the condition that Industrivärden would hold the options until maturity in February 1994, at which time they could be
used to subscribe for shares in ssab corresponding to 9 percent of
the capital and 12 percent of the votes.
Industrivärden exercised its purchase rights in 1994 and subscribed for shares in ssab for sek 499 million.
Excerpt from Industrivärden’s
1992 Annual Report describ­
ing the purchase of SSAB
warrants.
Swedish business daily Dagens Industri, 2002:
“Industrivärden sees major potential in steel.”
Pictured in the photo is Industrivärden’s Executive Vice President Carl-Olof By, commenting
that he expects continued favorable development for Sandvik and SSAB.
96
Combination of stock and CPN classes 1993
Halving in the number of classes of stock and CPNs
following the acquisition of plm in 1987, Industrivärden
had four classes of stock (a restricted, b unrestricted, c restricted
and c unrestricted) along with four series of corresponding cpn’s.
The division into restricted and unrestricted shares was voided by
law in 1991, after which Industrivärden was left with a total of six
categories of stock and cpn’s.
The 1993 Annual General Meeting voted in favor of combining
the a and b stock classes and the a and b cpn’s, after which Class
a and c stock remained along with series a and c cpn’s, or a total
of four categories of stock and cpn’s.
In connection with the acquisition of Bahco, Industrivärden
obtained ownership of its own Class a, b and c stock and cpn’s,
which by law had to be sold within two years from the date of
acquisition, or not later than January 1994. The 1993 Annual General Meeting also resolved that these would be converted to Class c
stock and cpn’s before being sold.
In early 1994, 45 percent of Industrivärden’s cpn’s were converted to stock as a result of a relaxing in taxation of stock dividends.
97
Prospectus on the sale of treasury shares
in 1993.
Sale of majority shareholding in PLM 1995
PLM ripe for broader ownership after restructuring
Prospectus on the sale of the majority
shareholding in PLM in 1995. An offer
was made to Industrivärden’s sharehold­
ers to purchase warrants at a favorable
price.
at the time that Industrivärden acquired plm in 1988 through a
takeover bid, plm was a diversified packaging group with the bulk
of its operations in Scandinavia. Beverage packaging accounted
for roughly 40 percent of sales. During the next eight years, plm
carried out substantial restructuring with the goal of concentrating
its operations in areas in which it could achieve a strong market
position.
plm acquired two beverage can companies in Germany in 1987
and 1988, and one in Austria in 1994. Two glass packaging companies were acquired in 1989 – one in Norway and one in the uk. Parallel with these acquisitions, operations were concentrated through
the sale of the waste management company Sellbergs in 1989 and a
number of plastics companies in 1989 and 1990. A glassworks was
closed in 1992 as a step in concentrating the glass operations. Finally, the tin can division was sold in 1994. As a result of these changes,
beverage packaging had grown to approximately 80 percent of sales,
while the share of sales to markets outside Sweden had increased to
roughly 85 percent. plm had thereby been transformed from a diversified packaging company to a highly concentrated manufacturer
of beverage and food packaging made of aluminum, steel, glass and
plastic.
Against this background, Industrivärden determined that plm
was ripe to obtain another owner. After considering various alternatives, such as selling plm to a single buyer or selling the company’s
divisions to different buyers, it was decided that broad ownership
of plm would provide the best foundation for further development. Accordingly, an initial public offering was carried out in 1995,
whereby 55 percent of the shares were offered to Industrivärden’s
shareholders at a discount of 20 percent in relation to the company’s estimated market value of sek 4 billion. The ipo was carried
out according to plan, and the market capitalization was well in
accordance with the estimated market value.
98
In 1996, a further 22 percent of plm’s stock was sold on the
market through book building in order to broaden ownership of the
company. In 1998 the British packaging company Rexam acquired
Industrivärden’s remaining 23 percent of plm’s stock and at the
same time made a public offer to buy all of the other shares. plm
thereby became a part of Rexam.
Dagens Industri, 1998: “PLM bid
worth SEK 5 billion: Industrivärden
first to accept sale.”
American Ball shows interest in acquiring PLM 1995
In May 1995 Industrivärden’s Annual General Meeting resolved that a
maximum of 75 percent of plm’s stock would be sold with preferential
rights to Industrivärden’s shareholders at a price that was 20 percent
below the company’s estimated market value of sek 4 billion.
In June, the American packaging company Ball Corporation
took up initial contact with Industrivärden and expressed an interest in acquiring plm for sek 4.1 billion, including sek 2.2 billion
in cash and sek 1.9 billion in Ball shares. The bid was subsequently
raised to sek 4,360 million, including sek 2,160 million in Ball
shares, corresponding to approximately 14 percent of Ball’s capital
stock. However, representatives for plm voiced strong opposition to
the sale to Ball, arguing that the price difference was small in reality and that a sale would most likely result in the breakup of plm,
which would create negative publicity.
Ball then lowered its bid to sek 4,175 million, including sek 1,975
million in shares. Industrivärden decided to stick to its original decision
to carry out an initial public offering for plm with preferential rights
for Industrivärden’s shareholders to buy 55 percent of the shares.
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PLM’s stock market introduction in 1995
received extensive press coverage.
Large shareholding in Sandvik acquired
in 1997 – largest investment decision ever made
Sandvik acquired from overcapitalized Skanska
Cover of Swedish business
weekly Affärsvärlden, May
22, 1987: “Nature reserve for
industrialists.”
in 1997 skanska announced its plan to divest a number of shareholdings, including a stake in the engineering company Sandvik
corresponding to 20 percent of the capital and 26 percent of the
votes. As an active owner of Skanska, Industrivärden had advocated
that the company, which was overcapitalized, should return approximately sek 10 billion to its shareholders.
Industrivärden was clearly interested in acquiring stock in Sandvik, with the goal of becoming the company’s largest shareholder.
In the end, Industrivärden bought stock corresponding to 9 percent
of the capital and 11 percent of the votes for a purchase price of sek
4,070 million. The deal was financed through borrowing, which
increased Industrivärden’s debt-equity ratio from 3 percent to 16
percent.
Sandvik is a world-leading maker of cemented carbide products
and specialized steel products. The company’s success factors are
its proximity to customers, product renewal and niche strategy. Its
customers are in the mechanical, automotive, aircraft and energy
industries.
At the time of the purchase, the cemented carbide operations
encompassed metalworking tools in the Tooling and Seco Tools
business areas, rock drilling tools in the Rock Tools business area,
and cemented carbide products in the Hard Materials business area.
Headline reading: “Sandvik major profit for Industrivärden –
Earnings of a billion to date – Aga weighs down portfolio.”
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Sandvik also offered advanced steels, hand tools and sorting belts.
During the most recent ten-year period the company’s return on
capital employed was in excess of 18 percent, with stable earnings.
Other structural deals carried out at the time of the Sandvik
purchase in 1997 included the acquisition of a Finnish rock drilling tool company and the Swedish cemented carbide tool company
Kanthal. The other product areas, such as hand tools and sorting
belts, were regarded as divestment candidates.
Industrivärden’s overall assessment of Sandvik was that the
company was one of Sweden’s most stable and profitable engineering companies with world-leading positions in most of its segments
and favorable growth prospects.
Industrivärden’s
purchase of a large
shareholding in Sandvik
in 1997 received wide­
spread press coverage.
Among the headlines
were: “Sandvik major
gain for Industrivärden”
and “Only winners
after major purchase of
Sandvik.”
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Thorsman and Fundament divested in 1997
for healthy profit
Sale of directly owned real estate business and IPO candidate Thorsman
the property company Fundament was formed in 1981 following the transfer of a number of investment properties from the
subsidiaries jm and Olsson & Rosenlund. Fundament’s portfolio was subsequently complemented through numerous property
purchases. In 1996 the company owned eight attractively situated
properties containing exclusively commercial space, including six in
the Greater Stockholm area and one each in Malmö and Karlstad.
The properties were sold in 1997 for a combined total of sek 950
million, which was well in line with the value determined on an
earnings basis.
The engineering company Thorsman manufactured installation
material, such as plugs, clips, electrical outlets and cable trunking.
Thorsman also sold installation systems, such as electrical trunking,
service poles, floor boxes, cable ladders and cable trays. Ladders and
masts were sold by the subsidiary Wibe.
Thorsman had high market shares in the Nordic countries, the
Netherlands and Ireland, and was a medium-sized player in the uk.
Return on capital employed had been in excess of 20 percent for
several years.
At its 1997 Annual General Meeting, Industrivärden announced
that, in view of Thorsman’s favorable performance, it was a clear
candidate for an initial public offering. Several potential investors showed an interest in acquiring Thorsman. An agreement was
reached with the Danish company Lexel on the sale of Thorsman
for sek 2 billion, which was more than what was believed could be
received from an attractively priced stock market introduction. The
sale of Thorsman generated a capital gain of sek 1,374 million.
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Swedish daily newspaper Svenska
Dagbladet, September 9, 1997:
“Major capital gain for Industrivärden.”
Dagens Industri, September 9, 1997:
“Industrivärden sells subsidiary for
SEK 2 billion.”
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AGA sold in 1999 to Germany’s Linde for healthy profit
Structural deals lead to bid for AGA
industrivärden made its first purchase of stock in ab Svenska Gasaccumulator (aga) in 1957 in connection with a combined
new issue/bonus issue carried out by the company. No in-depth
analysis was considered necessary, since Industrivärden’s chairman
at the time, Ernfrid Browaldh, had been a member of aga’s board
for several years.
After additional purchases of stock over the next 40 years,
Industrivärden’s acquisition cost in 1998 had a market value of sek
3,076 million. Industrivärden’s voting stake in aga was 20 percent,
while the company accounted for 10 percent of the value of the
equities portfolio.
Prospectus on Linde’s offer to buy all of
the shares in AGA in 1999.
.
Finanstidningen,
February 26, 1998:
“Major owners put
pressure on Aga.”
In 1998 aga was a pure gas company with three business areas
focusing on the manufacturing industry, the process industry and
healthcare, respectively. A comparison with the world’s five dominant gas companies showed that aga had had a lower operating
margin and lower investment return than the market average for
many years in a row. Historically, aga’s stock had generated a
favorable risk-adjusted return for long-term investment horizons,
but this pattern was broken in the mid-1990s.
Industrivärden’s conclusion was that aga would have to raise
its profitability, scale back the pace of investment and overhaul its
capital structure. Provisions for structural costs were made in the
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Headline from Swedish business weekly
Veckans Affärer, no. 9, 1988: “Power
struggle at AGA – Ågrup forced to go?”.
Dagens Industri, August 17, 1999:
“Industrivärden trades gas for IT.”
annual accounts for 1997 as well as 1998. In 1998 aga also held
merger talks with other gas companies in its search for coordination
gains – which would be found mainly by cutting costs in administration, production and sales.
From 1995 to 1999, the Swiss company Gas Vision, headed by
the financier Martin Ebner, acquired large blocks of aga’s stock
and amassed 30 percent of the votes. These purchases had a strong
impact on aga’s stock price, especially in 1999, leaving aga with a
considerably higher P/E multiple than its competitors.
In 1999 a number of structural deals took place in the gas
industry. In August, aga’s German competitor Linde made a bid
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Finanstidningen, May 15, 1999:
“Ebner in battle for Aga.”
Svenska Dagbladet, August 1999.
The headline reads:
“This feels very
sad,” referring to
Clas Reuterskiöld’s
reflections on the sale
of Aga to a foreign
company.
Dagens Nyheter,
August 1999:
“Aga sold to
Germany.”
Linde’s acquisition of AGA received widespread commentary in
Swedish newspapers.
for all of aga’s shares following several days of negotiations with
Industrivärden and Gas Vision. The bid premium was just under 20
percent compared with the average share price during the preceding month. The purchase price paid to Industrivärden was sek 3.6
billion, with a capital gain of sek 3.3 billion including the share
redemption that was carried out before the bid went public.
Press release published on August 16,
1999, concerning the sale of AGA.
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Pharmaceutical portfolio is built up and divested
Large capital gain on sale of Lundbeck
from 1998 to 2000 Industrivärden built
up a portfolio of pharmaceutical stocks, with
holdings in Pfizer (u.s.), Lundbeck (Denmark), and the Swedish companies Pharmacia and Karo Bio, with a total acquisition
cost of sek 2.3 billion.
Pfizer specialized primarily in choles­
terol-lowering, antihypertension and antidepressant drugs, and had leading medicines
for erectile dysfunction and pain management.
Lundbeck was focused entirely on central nervous system
diseases, mainly antidepressant medicines. Industrivärden became
Lundbeck’s second largest shareholder, with 3.6 percent of the capital, while a foundation was the entirely dominant principal owner.
With only two products, Lundbeck was regarded as an extreme
growth company, which entailed a high level of risk in the company’s valuation.
Finanstidningen, February 11, 1998:
“Industrivärden on the hunt for
pharmaceuticals.”
Industrivärden successively divested its pharmaceutical portfolio
from 2001 to 2003 as part of the new strategy to have a concentrated portfolio of large and midcap listed Nordic companies. Industrivärden sold its holding in Lundbeck in 2002 for sek 2.3 billion,
generating a capital gain of sek 1.5 billion.
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Press release concerning Industrivärden’s
sale of its entire holding in Lundbeck in
2002.
Svenska Dagbladet, April 6,
2002: “Billion kronor bargain in
Denmark for Industrivärden.”
Investment in Skandia
Part of medium-term portfolio without ownership ambitions
in 1995 industrivärden began building up a shareholding in
Skandia, an international insurance and long-term savings group
with operations in more than 20 countries. Skandia’s core business
was long-term savings, which was conducted mainly in the Assurance & Financial Services (afs) division – primarily in Europe and
North America. The largest product group consisted of variable annuities, which were sold in collaboration with the world’s foremost
fund management companies, thereby enabling Skandia to offer its
customers the best funds in the market.
By the end of 2000 Industrivärden was Skandia’s second largest
shareholder, with 4.5 percent of the capital and votes. The holding
reached a market value of sek 7.3 billion, which exceeded cost by
sek 4.6 billion.
Weak performance in the world’s stock markets in 2001 and
2002 led to a drop in savings and falling values for Skandia’s managed
assets. As a result, the company posted substantial operating losses in
2001 and 2002. The u.s. operation, which previously had been Skandia’s most profitable, was sold in December 2002 for a substantial loss.
Industrivärden sold its entire holding in Skandia in 2003 for a
capital loss of sek 1.5 billion. The proceeds from the sale, totaling
sek 1.2 billion, were invested in long-term holdings, including sca,
Handelsbanken, ssab and Sandvik.
An investigative report regarding Skandia
prompted comments from the principal
owners regarding the company’s compensation levels and other matters.
Press release from December 1, 2003,
regarding the findings of the investigative
report conducted by the major shareholders.
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Finanstidningen, August 17, 1999:
“Industrivärden lays its hands on Skandia.”
Skandia was alone in its ability to offer
streamlined exposure to global pension
savings, and its share price soared to
extreme heights.
Dagens Industri, December 2, 2003: “Chain of
ownership to the board broken.”
Dagens Nyheter, December 20,
2003: “Industrivärden sells all of
its shares in Skandia.”
Press release on Industrivärden’s sale of its
holding in Skandia in 2003.
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INTERVIEW
Clas Reuterskiöld
ceo 1994–2001, board member 1994–2003
You were hired as Executive Vice President of Bahco in 1989 with
the understanding that you would succeed Carl-Erik Feinsilber as
ceo upon his retirement a few years later. In reality, you took over
for him already in 1990 when he was called in at short notice to
step in as ceo of Industrivärden. A few years later, Industrivärden
made a bid for Bahco, and you instead took the helm at Inductus,
which was a group of industrial companies from Bahco and Dacke.
How did you react to the rapid changes during those years?
Clas Reuterskiöld, President of
Inductus from 1990 to 1994.
Clas Reuterskiöld was formerly
President of the companies
Billingsfors, Grafo Print, Solna
Offset and Marieberg.
As ceo of a listed company you have to loyally adapt to ownership
changes. Rapidly changing conditions belong to the rules of the game.
From 1991 to 1993, nine of the 14 Inductus companies were divested. Were there any of these sales that you remember in particular?
I remember especially the sale of Karner to the family-owned
American company Batts. Both companies were large manufacturers of clothes hangers, and Batts was the best buyer for Karner.
I called Mr. Batts, the father, who had come up with the idea of
displaying clothes on hangers instead of in piles on shelves, and
asked to meet him in connection with a layover in the u.s. Batts
was interested in buying Karner, but the final negotiations in London became complicated, involving a lengthy Anglo-Saxon–type
contract. I happened to find an error in the terse contract wording,
which created a bit of a fuss. But in the end we signed just before
Christmas in 1992.
The divestment of plm took place in three stages from 1995 to 1998.
What do you recall from plm’s ipo in 1995?
The sale of plm turned into a drawn-out process with many chapters. The sale was pursued because Industrivärden’s high discount
was considered to be due to its large holding in plm. Since our
valuation model for plm was well known, I had a hard time understanding the logic of that argument. Nevertheless, a prospectus was
110
drawn up in accordance with the American rules, entailing that the
first pages of the prospectus were dedicated primarily to describing
the risks that a potential buyer would be exposed to!
The American packaging company Ball was interested in acquiring
plm at the same time that preparations were being made for the
ipo. What can you tell us about the negotiations with Ball?
Ball contacted Industrivärden at an early stage, but wanted to pay
a large portion of the purchase price with newly issued Ball stock,
which we did not want. In addition, we met considerable resistance
from plm’s board, management and the unions to having Ball as
an owner, and we received letters as well as visits on the matter. In
essence this behavior was disloyal, and we were forced to conduct a
major rearrangement in plm’s board prior to the ipo.
Parallel with this, plm’s ceo Rolf Börjesson left to head the
British packaging company Rexam. In 1998 Rexam made a bid for
all of plm, which we and the other shareholders accepted.
In 1997, Industrivärden bought a large block of shares in Sandvik for
sek 4 billion, which at the time was the largest investment decision
ever made by Industrivärden. The seller was Skanska, which thereby
refined its business focus. What comments do you have on the deal?
At the time, Custos was a major shareholder in Skanska and was
pushing for the company to concentrate on its construction operations and to sell its holdings in Sandvik, skf and Graninge, and to
distribute the property company Drott. Industrivärden had conducted thorough due diligence of Sandvik and was willing to buy a
large block of shares. After some relatively tough negotiations, we
were able to agree on a price after some adjustments.
At the 1997 annual meeting you announced that Thorsman was ripe
for an ipo, but then several industrial buyers showed an interest in
acquiring the company. What can you tell us about the agreement
with the Danish company Lexel to sell Thorsman for sek 2 billion?
Thorsman had been previously listed on the stock exchange, but
Bahco bought up the outstanding minority shares in order to gain
access to the company’s cash flow. To complement Thorsman’s offering of electrical installation products, we acquired its sister company Wibe, which made cable trays, among other things. Although
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we considered selling Thorsman to Industrivärden’s shareholders, an
external sale proved to be considerably more favorable.
A third large deal in 1997 was the divestment of the property
company Fundament. Why did Industrivärden want to reduce its
exposure to real estate?
Fundament was a relatively small property company, plus we had
large, indirect property holdings through Skanska.
Industrivärden bought its first stock in aga back in 1957. aga was a
large and profitable company for many years, but in the mid-1990s
aga began showing poorer profitability than the industry average.
What was the background to the unsatisfactory performance that
prompted Industrivärden to consider selling aga? What role did
Martin Ebner play in aga’s sale to the German company Linde in
1999?
aga had carried out a relatively large capex program in the mid1990s, but its profitability did not improve. All comparisons with its
foreign competitors showed that aga had fallen behind. A consolidation was in progress in the gas industry, and aga could hardly
acquire another company when it had lower profitability than the
industry average.
Through his company Gas Vision, Martin Ebner had bought
large blocks of stock and driven up aga’s share price to a considerably higher p/e multiple than its industry peers. When Linde made
a bid for aga, it turned out Ebner had already agreed the price with
Linde.
Industrivärden heard many reactions that “a fine old Swedish
industrial company” should not be sold off to a foreign company.
But from our perspective, a sale was the best alternative, in light of
the structural changes that were taking place in the industry.
From 1998 to 2000 Industrivärden built up a portfolio of pharmaceutical stocks, with holdings in Pfizer, Lundbeck and Pharmacia.
What do you think about those investments today, considering
that Lundbeck was sold for a large gain in 2002?
Industrivärden needed to balance its equities portfolio by complementing with a new sector. The pharmaceutical industry was a
natural choice. We were the second largest owner of the Danish
company Lundbeck, which was focused exclusively on antidepres-
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sant medicines. A Danish foundation was the entirely dominant
shareholder. When we sold our holding in Lundbeck after a few
years, we earned a large capital gain.
In 1995 Industrivärden began building up a stake in Skandia.
By the end of 2000 Industrivärden was Skandia’s second largest
shareholder, with 4.5 percent of the capital and votes. The market
value was nearly three times as high as Industrivärden’s acquisition
cost. As a result of the stock market’s weak performance in 2001
and 2002, Skandia suffered large losses, and Industrivärden sold its
holding in 2003 for a considerable loss. What do you think about
the investment in Skandia today?
The investment in Skandia was a sad story. Skandia was an international long-term savings company that had a very high valuation
due to the discounting of future profits, or embedded value. When
the stock markets fell sharply from 2000 to 2002, the value of
money saved in funds decreased substantially and embedded value
caved in.
In addition, Skandia’s management had poor insight into the
company’s American operation, afs.
Industrivärden was not willing to accept the overly generous
stock option programs for senior executives that were created by
Skandia in the early 2000s. Instead, the previous option program
was extended and its cap was removed. The outcome of this program was completely unreasonable, and the market subsequently
lost all confidence in Skandia.
The investment was very good during the initial years, but
turned out to be a loss when the shares were finally sold in 2003.
Anything else you would like to add?
I was once asked in some context if Industrivärden’s Ericsson stock
was for sale – when the value of Ericsson’s stock had peaked in
1999/2000 – and was pressed to indicate a certain price level, which
was subsequently exceeded for a short time. My basic view is that,
given the right price, everything is for sale. For a holding company,
a perpetual holding must entail a higher discount.
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INTERVIEW
Bo Rydin
chairman of the board 1988–2002
board member 1973–2002
You served as a director on Industrivärden’s board for nearly 30
years, including 14 years as Chairman. What is the most memorable deal you were involved with during that period?
I remember two deals in particular – when Industrivärden became
the principal owner of Sandvik, which is a treasure in Swedish industry, and our involvement in Fermenta, which was a very unfortunate story.
Bo Rydin was President and CEO of SCA
from 1972 to 1988, and Chairman from
1988 to 2002. He also served as Chairman of Skanska, the SAS Representative
Assembly and Graninge, and Vice Chairman of Handelsbanken and Volvo.
You came in contact with Handelsbanken in connection with Industrivärden’s acquisition of a majority shareholding in the familyowned cement manufacturer Gullhögens Bruk in 1959, where you
were cfo. What was your impression of Industrivärden’s governance of Gullhögen through board representation and otherwise?
It was great working with Industrivärden’s ceo’s Stig Ödmark and
Nils Berggren.
In 1965 Gullhögen acquired a majority shareholding in Billesholms
Glasullsbolag (name subsequently changed to Gullfiber). Industrivärden sold its shares in Gullhögen to Cementa in 1973 after
Gullfiber was sold to Gullhögen’s former owner. What was your
role in those deals?
I was involved to the highest degree. Höganäsbolaget wanted to
sell Billesholms Glasull, which was suffering from low profitability,
when Saint Gobain entered the picture as a licenser. Actually it
was a risky purchase, but it turned out to be a very favorable deal,
among other things because the company had an enterprising ceo.
The cement manufacturing business was sold in the context of
a sharply lower construction market. Clear structural benefits were
achieved by combining the companies.
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You were named ceo of sca in 1972, and in 1973 you became a
member of Industrivärden’s board. The ownership ties between
Industrivärden and sca have been very strong since the 1950s,
when Industrivärden bought 10 percent of sca’s stock from Handelsbanken at a time when the bank was seeking to wind up its
extensive involvement in sca. What is your view of the enduring
ownership ties between sca and Industrivärden?
When I joined Industrivärden’s board, it lacked a clear principal
owner. I felt it was important for sca to have stable ownership
of Industrivärden. With the consent of Tore Browaldh, who was
Industrivärden’s chairman at the time, sca gradually acquired
20–25 percent of the votes in Industrivärden. These shares were
subsequently sold to various foundations that are closely related
to Handelsbanken and sca, and Industrivärden’s ownership was
thereby secured.
Tell us about Industrivärden’s actions surrounding the shareholding in Fagersta in connection with Trend Invest’s aggressive
purchases of Fagersta stock in 1976 and about the sale of the entire
shareholding in Fagersta to Sandvik in 1978.
Fagersta had been investing too little for a long a period of time,
which is unsustainable in the long run. Trend Invest was a speculative, short-term owner that we were working against. I preferred a
long-term owner, such as Sandvik.
Industrivärden formed Indus Innovation in 1984 to provide
venture capital to small, high-tech companies. At its peak Indus
Innovation comprised six companies before the business was sold
in 1988 for a small profit. Do you think this form of venture capital
is suitable for a holding company like Industrivärden?
Industrivärden’s ceo at the time, Per Lindberg, wanted to establish
a counterpart to Incentive. It was not very successful, however.
In the early 1980s Industrivärden’s equities portfolio included more
than thirty holdings. This was gradually concentrated so that by
1991 it included only ten. Describe the board’s reasoning when
Industrivärden sold off all of its smaller holdings.
It was necessary to concentrate the equities portfolio in order to have
an overview and insight into the portfolio companies. Moreover,
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Industrivärden’s ability to assist an excessive number of portfolio
companies with new issues was limited.
In 1986 Gullfiber was split up into the hearing protection company
Bilsom, the acoustics company Ecophon, and the development
company Gedevelop – which were all kept by Industrivärden – and
the remaining insulation materials business, which was sold to
Saint Gobain, thereby concluding more than 20 years of cooperation with Saint Gobain. What are your comments?
Gullfiber was a good company, but limited to the Swedish market. It was natural to sell the insulation materials business to Saint
Gobain, which was very big in that area. Bilsom was the most
profitable of the three companies that Industrivärden kept. However, the companies were too small for Industrivärden and were sold
after a few years.
DACKE
What was Industrivärden’s initial motive for acquiring a large,
minority shareholding in Nils Dacke in 1986 and subsequently for
making the company a wholly owned subsidiary in 1989?
We were offered to buy Sonesson’s shareholding in Nils Dacke at
an attractive price. This would be a big catch for us. Dacke Handel
was the origin to Indutrade, which has performed very well since its
stock market introduction in 2005.
Industrivärden’s involvement in Fermenta from 1986 to 1993 is well
known and is described at length in earlier sections of this book.
Can you sum up your reaction to the tumultuous events surrounding Fermenta?
Late one Friday afternoon, Industrivärden’s ceo, Per Lindberg,
was offered to “park” a large block of Fermenta shares with Industrivärden. The deal was considered to be risk-free, since Handelsbanken and Volvo were involved. But when the bottom subsequently fell out of Fermenta, it was not possible to demand damages. I
remember a long succession of meetings and that it was a protracted and costly affair for Industrivärden.
Skanska became a new, large shareholding in 1987, while Industrivärden’s shares in jm were sold to Skanska in exchange for newly
issued stock. Were there already plans then to increase the holding
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in Skanska, which in fact happened in 1998 through acquisition of
a large block of shares from Custos?
Skanska is a great company! I remember many years ago when a
large parking garage was to be built under a water tower at one of
the gateways to central Stockholm. Skanska was the only construction company that could guarantee that the water tower would not
be damaged.
Our hope when we sold the jm shares to Skanska in exchange
for newly issued Skanska stock was to subsequently be able to
increase our ownership by acquiring Class a shares, but it was hard
to find suitable blocks. To grease the wheels, Industrivärden helped
Sven Hagströmer and Mats Qviberg gain control over Custos,
through which we were able to increase our ownership of Skanska
at a later stage.
In the mid-1980s Industrivärden’s board declared that the strategic direction was to strengthen the long-term equities portfolio,
increase the share of wholly owned subsidiaries with industrial operations, and to have a small, tactical investment portfolio. What
was the idea behind making Industrivärden into more of a mixed
holding company?
The reasons given at the time were that a mixed holding company
had an internal capital market, plus there were tax advantages. Following changes in the tax code, these reasons are no longer valid.
The bid for the outstanding shares in plm in 1987 was natural in
view of Industrivärden’s strategy at the time. In connection with
the acquisition, were there any concrete plans to take various
structural measures in plm in view of the company’s falling profitability?
At the time of the acquisition, plans had been drawn up to restructure plm into a pure play beverage can company, which would
require new investment as well as acquisitions and divestments.
You initiated the ceo shift in autumn 1989 after it was learned that
Industrivärden’s ceo at the time, Kjell Brändström, had let sca
bear the costs for a sailboat after he had bought the boat from sca.
What do you have to say about this unfortunate chapter in Industrivärden’s history?
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Mölnlycke, which had previously been acquired by sca, also owned
the company that made Maxi sailboats. In connection with a tax
audit of sca, improprieties were discovered regarding costs for the
boat, which led to an indictment. I lost confidence in Kjell Brändström, who was forced to step down. Everyone involved was hurt by
the matter.
Industrivärden’s new ceo in 1990, Carl-Erik Feinsilber, took the
initiative to a bid for Bahco in 1991, where he had previously been
ceo and which was originally formed by Industrivärden. Was it
made entirely clear from the start in connection with the acquisition that the 14 industrial companies in Bahco and Dacke would be
considerably fewer through divestments?
I had to persuade Carl-Erik, who was planning on retiring to
devote himself to cultural interests, to take over as ceo. A few years
earlier Industrivärden had expressed an interest in acquiring Bahco,
but failed to gain the board’s support. As the new ceo of Industrivärden, Carl-Erik had a different view of the matter, and Industrivärden acquired Bahco at an attractive price. It ended up being
an excellent deal for Industrivärden through the sale of Bahco’s
subsidiaries, such as Thorsman in 1997 and Besam in 2002.
plm’s restructuring continued after its acquisition in 1987 through
acquisitions, new establishment, divestments and closures. How
close was the cooperation between the boards of Industrivärden
and plm during those years?
All structural matters were discussed by Industrivärden’s board
before being presented to plm’s board. I recall in particular the
investment in a large can plant in La Ciotat in southern France.
In 1992 Industrivärden bought purchase rights in ssab, which were
converted to stock in 1994, whereby Industrivärden became the
largest owner of ssab. Did the board see major potential in ssab
even though it took many years before the share price moved in a
positive direction?
Industrivärden was considered to be a desirable, long-term owner
and therefore received the offer from the Swedish government to
purchase rights. We conducted a special analysis of ssab’s technical
status and also consulted with ssab’s chairman at the time, Björn
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Wahlström. ssab has turned out to be a great deal on account of its
niche focus, such as on high-strength steel.
Following a number of structural measures, plm was considered to
be ready for a new owner in 1995. Tell us about the board’s discussions that led to the decision to offer a majority of the shares to
Industrivärden’s owners at a 20 percent discount. What talks were
held with industrial interests in connection with plm’s stock market introduction?
Industrivärden’s stock was difficult to value with the large shareholding of plm, even though we had carefully explained to the
stock market how we conducted our valuation. Since the structural
program had been completed, it was therefore natural to divest the
company in a number of steps. The American company Ball made
an offer for plm, but wanted to pay with its own stock, which we
were not interested in.
As an active owner in the overcapitalized Skanska, Industrivärden
advocated returning capital to the shareholders by divesting various shareholdings, including a large stake in Sandvik. Tell us about
the discussions and negotiations that led to Industrivärden acquiring 11 percent of the votes in Sandvik in 1997 for sek 4 billion.
The acquisition of the large shareholding in Sandvik was an interesting arrangement. Skanska, which was overcapitalized at the
time, was planning to sell its shareholdings in Sandvik, skf and
Graninge. As a related party to Skanska, Industrivärden could not
participate in the discussions held by Skanska’s board. Percy Barnevik, who was chairman of both Skanska and Sandvik, supported
Industrivärden going in as a long-term owner of Sandvik. It was a
very good deal for Industrivärden.
The divestment of Thorsman, which was previously owned by
Bahco, was another major deal in 1997. At Industrivärden’s annual
meeting in that same year, a stock market introduction of Thorsman had been announced, but the company was sold to an industrial buyer. What was the board’s reasoning behind this deal?
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Thorsman was too small for the stock market. We received an attractive offer from the Danish company Lexel, which we accepted.
The sale of aga to the German company Linde in 1999 received a
lot of coverage in the press. The deal was carried out in the context
of aga’s falling profitability in the mid-1990s at the same time
that a restructuring was under way in the gas industry. aga’s stock
price had been inflated by the Swiss financier Martin Ebner via the
company Gas Vision. What considerations led to the decision to
sell the entire shareholding in aga?
aga was a fine company, but with limited development opportunities. Martin Ebner disrupted the company’s plans through his large
stock purchases. We realized that aga belonged to a larger context
and received a good offer from Linde.
During the period 1995–2000 Industrivärden build up a large
shareholding in Skandia, which at the time was an international
long-term savings and insurance group, and was the second largest
owner. At year-end 2000 the market value was nearly three times
as high as the acquisition cost. Weak performance in the stock
markets in the years that followed led to major losses for Skandia.
Industrivärden sold its entire holding in 2003 for a substantial loss.
What is your view today of Industrivärden’s investment in Skandia?
Both I and ceo Clas Reuterskiöld had served on Skandia’s board
and felt it was an interesting company with good development
potential. However, I realized after some time that Skandia’s stock
was overvalued and therefore wanted to discuss selling the Skandia holding, but our investment organization felt there was further
upside. In the end, Skandia was a losing deal when the stock was
sold in 2003.
The moral is that analysts can make brilliant presentations but
are not so good at judging future development. My own simple rule
of thumb is to not travel in an aircraft that is older than 25 years or
keep a stock with a p/e multiple above 25!
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The business press often refers to various ownership constellations
in Swedish industry, of which the so-called Wallenberg sphere
– with Investor – and the Handelsbanken sphere – with Industrivärden – are the largest and most influential. What is your view
of the “sphere” concept, which is grounded in the voting rights
differentiation?
Long-term owners are needed to develop a company. With today’s
tax rules, even families can be long-term owners. I have argued in
numerous contexts together with Peter Wallenberg from Investor in
favor of the Swedish system of voting rights differentiation, which
in practice is identical to the Continental system of nonvoting stock
or shares with a veto right – so-called golden shares. In my view,
however, the voting rights difference should not be more than ten
times.
One argument for keeping a voting rights differentiation is also
that, as a rule, at the time of purchase, Class a shares have a higher
price than Class b shares. Instituting a single class would therefore
involve taking away value from Class a shareholders.
For those who want to convert their Class a shares of Class b
shares, which sometimes are easier to sell, there is the opportunity
for conversion, such as in the case of both sca and Skanska.
Finally, I want to stress that Industrivärden’s current ownership structure, with low trading volume in Class a shares – only 19
percent in 2008 – entails a risk of contributing to a lack of interest
in the market for Industrivärden’s stock.
What is your view of holding companies as an equity investment?
On numerous occasions I have advised foundations to invest half
of their capital in Industrivärden and half in Investor. They would
thereby have a stake in the most prominent financial and industrial companies in Sweden. Moreover, holding companies have low
management costs. Banks usually advise private customers to invest
in mutual funds based on their own interest, since they charge high
management fees.
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INTERVIEW
Jan Wallander
vice chairman 1984–1990
In the mid-1980s you wrote a paper on cross-ownership entitled Mellan Scylla och Charybdis [Eng. trans.: “Between Scylla and Charybdis”]. By Scylla you meant the “rock of stability,” and by Charybdis
“the tumultuous currents of transformation.” You postulated that after
several decades of stability, ownership changes were now taking place
more rapidly and at a greater magnitude. How do you see the situation
today regarding ownership changes in major listed companies?
Development comes in waves. In recent years there haven’t been
very many major ownership changes.
Jan Wallander served as President
of Handelsbanken from 1970 to
1978 and as Chairman from 1987
to 1991. He was also Chairman
of Investment AB Bahco and Vice
Chairman of Beijer and Ericsson.
Voting rights differentiation has been debated at length, and companies that have had voting rights differences of a thousand times
have narrowed the difference to a factor of ten. What advantages
and disadvantages do you see in voting rights differentiation?
Voting rights differences are a way to create stable ownership of a
company, which can be combined with cross-ownership and stock
pyramids.
The advantage of stable ownership is that a company’s business
is not disrupted by large and fast changes in ownership or the risk
of such. The obvious disadvantage is the risk that the company will
stagnate because of too much stability. Breaking up a stable ownership situation can be a prerequisite for achieving necessary changes.
In general, a company’s management is usually not inclined to
drive a change in the company’s ownership, since it could result in
negative changes for its part.
There is a constant, opposing force between the advantages of
stability’s Scylla and change’s Charybdis.
When you took over as ceo of Handelsbanken in 1970, you implemented large and sweeping changes in the bank’s organization and
way of working. How did you perceive the owners’ reaction to your
proposals?
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The owners were entirely in agreement to giving me
free reins to implement major changes.
In reality, a large owner can dominate an annual
shareholder meeting with strong voting stock that accounts for considerably less than a majority of votes in
the company. As a matter of principle, is it good for a
company to have stable ownership even if it is based on
a relatively small percentage of the capital stock?
It is important for a company to have strong owners who are willing to stay the course and try to solve problems. A prime example is
Ericsson, which has undergone numerous crises. After the Kreuger
crisis in the 1930s, Ericsson relied on short-term notes from Handelsbanken and Stockholms Enskilda Bank to finance its ongoing
payments.
During the most recent crisis in the beginning of the 2000s, as
major owners Industrivärden and Investor guaranteed part of the
large, sek 30 billion rights issue carried out by Ericsson. Since it is
difficult for holding companies to issue new stock because of the
holding company discount, this was a daring move, even though
the guarantee did not need to be used. What comments do you
have on that event?
Ericsson was one of the companies that kept its large voting rights
difference of a thousand times, but in connection with the rights
issue in 2002, the voting rights difference was narrowed to ten
times. Most of Ericsson’s capital has essentially long been in foreign
hands, but because of the voting rights difference, the Swedish
owners can still dominate at annual shareholder meetings, which I
believe has benefited Ericsson.
In other countries, there is nonvoting stock and stock with a veto
right (so-called golden shares). What do you think about that?
Nonvoting stock is worth consideration. Shareholders who are not
interested in engaging themselves in a company’s management, but
are only interested in a financial investment, would be interested in
buying such shares on account of the higher return it may generate.
However, in Sweden, nonvoting stock has never been issued as far
as I know.
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In the mid-1980s Jan Wallander published
a paper titled “Between Scylla and Charybdis.” In Greek mythology, Scylla and
Charybdis were two monsters on each
side of a small strait. Those who tried to
avoid the one monster wound up in the
clutches of the other.
CPN loan canceled 2001
Outdated form of financing discontinued
Prospectus from 2001 on the premature
cancellation of the CPN loan.
industrivärden issued convertible participating notes
(cpn’s) in 1998 as a suitable way of financing the acquisition of
plm. The cpn loan, which had a term of 40 years, had tax advantages since interest on the loan was tax-deductible for Industri­
värden. This enabled Industrivärden to carry out an issue without
diluting its stock, even though the stock was normally trading at a
discount. In addition, the cpn’s had practical advantages since their
price reflected the share price on account of the long term of the
loan, the interest was equal to 115 percent of the stock dividend, and
because a cpn could be converted to stock at any time. Thus, just
like the share price, the price of cpn’s could be quoted in kronor.
The advantages of cpn’s as a form of financing disappeared in
the early 2000s when dividends rendered gained equal tax status
with interest. Moreover, trading in Industrivärden’s cpn’s had been
low in recent years, with deals being concluded less than every
other trading day.
In order to simplify the share structure, facilitate valuation of
the company and enhance the liquidity of Industrivärden’s shares, in
October 2001 an extraordinary general meeting resolved to preliminarily redeem the cpn loan. According to the conversion terms, a
preliminary redemption of the cpn loan entailed that 1.1 shares of
the corresponding class would be received for each cpn held.
At the end of the application period in January 2002, 99.9 percent of the outstanding cpn’s had been registered for conversion.
Since then, Industrivärden has only two quoted classes of stock –
Class a and c, compared with four share classes and four cpn series
after the acquisition of plm in 1988.
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New strategy 2002: Active ownership instead of
equities management
Greater competition for capital leads to new strategy
as a result of changed conditions during the 1990s, it grew
increasingly difficult for holding companies to be a competitive
alternative and create value added through active ownership. The
discount to net asset value prevented capital contributions, while
mutual funds offered similar risk and return profiles in a more easily accessible form. Private equity companies attracted capital with
their investment strategies and exercised strong, active ownership.
In addition, more formalized corporate governance reduced the
influence wielded by holding companies.
The onset of globalization and competition for capital led to
demands for a focusing of the business concept for all holding companies. Against this backdrop, Industrivärden’s strategy in 2002 was
summarized in the following points:
• The goal is to generate high
growth in net asset value over
time through a professional
investment operation and
active ownership.
• The equities portfolio shall be
transparent and concentrated,
consisting mainly of large and
midcap listed Nordic companies.
• Industrivärden’s organization
shall be lean and efficient.
• T he investment operations
shall be based on a structured
process for continuous analysis of existing and potential
holdings.
• T he debt-equity ratio shall
be low and adapted to the
prevailing market conditions.
• The portfolio companies shall
have good potential for value
creation.
• As an active owner, Industri­
värden shall participate in the
development of its portfolio
companies.
Dagens Industri, February 16, 2002:
“Industrivärden likes large companies best.”
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Besam sold in 2002 for large profit
Keen interest in acquiring Besam
In 2002 an in-depth prospectus was
prepared for parties interested in “Toby,”
the code name for Besam.
the door automation company Besam was founded in 1962 by
Bertil Samuelsson, who also gave the company its name. Only a few
years after its start, Besam was acquired by Promotion, but Bertil
Samuelsson stayed on as president until 1997.
Besam grew rapidly, mainly through continuous establishment
in new markets. When Besam had reached such size and profitability that it was considered ready for the stock market, Promotion
carried out an initial public offering of Besam in 1985, but kept a
majority of the shares. After a few years, Promotion – which had
now changed its name to Bahco – made a bid for the outstanding
shares, and Besam once again became a wholly owned subsidiary.
At the time of Industrivärden’s acquisition of Bahco in 1991,
Besam was one of the world’s leading makers of gate and door automation. Its main products were automated swinging and sliding
doors and revolving doors. Its customer groups consisted of department stores, shops, hotels, airports, hospitals and other types of
Headline from the business newspaper
Finans Vision, April 30, 2002: “Assa Abloy
fills up Industrivärden’s coffers.”
126
public buildings. Besam had subsidiaries in Western
Europe, the u.s., Asia and Australia. Its profitability
was very high after the loss-generating French security products business had been discontinued.
During the 1990s Besam’s growth took place
mainly in service and maintenance in parallel with
the company’s continued establishment in new markets. Through gradual adaptation of the business, the
company’s international customers – who tended to
buy their door automation systems directly from the
manufacturer – grew more dominant. In 2001 business outside Sweden accounted for more than 90
percent of sales.
Industrivärden arrived at the opinion that an
industrial buyer was needed to further develop Besam.
When the company was put on the auction block for
sale in 2002, interest was great, with more than 20
prospective buyers. In the end, Assa Abloy acquired
Besam for sek 3.2 billion, generating a capital gain of
sek 2.3 billion for Industrivärden. The price corresponded to a p/e multiple of 21, which was an expression of substantial synergies.
127
Headline in southern Swedish daily newspaper
Sydsvenska Dagbladet, April 30, 2002: “Locks
giant acquires Besam: Deal to open doors for
continued expansion abroad.”
New issue by Ericsson 2002
Dramatic drop in demand requires new issue
The voting power for Ericsson’s Class B
stock increased from one-thousandth to
one-tenth of a vote in 2004. As a result
of this narrowing in the voting rights
difference, foreign owners’ share of the
votes increased from 1 percent to 23 percent. Industrivärden’s share of the votes
decreased from 28 percent to 13 percent.
ericsson’s market underwent dramatic changes around
the turn of the century. From the mid-1990s to 2000, the market
experienced exceptional growth through the expansion of mobile
infrastructure based on strong growth in subscriber numbers in parallel with expansion of fixed networks to handle the rapid growth in
Internet traffic. The peak was reached in 2000, but during the three
following years, 2001–2003, the market for network equipment experienced a significant contraction. Telecom companies were forced
to implement drastic cost reductions to adapt to weak demand.
Ericsson was hit hard by this drop in demand, combined with high
development costs for the third generation of mobile systems, and
posted operating losses totaling sek 65 billion from 2001 to 2003.
The number of employees was more than halved to adapt the business to the changed conditions.
To secure the company’s survival, a rights issue was carried out
in 2002, which raised a net total of sek 29 billion for Ericsson. In
its capacity as principal owner, Industrivärden issued a guarantee to subscribe for sek 3 billion in Ericsson stock, of which sek
0.7 million consisted of its existing shareholding. The issue was
Press release published on July 19, 2002,
concerning Industrivärden’s commitment
to subscribe for shares in Ericsson’s new
issue.
128
fully subscribed, and thus the guarantee never needed to be used.
Industri­värden subscribed for a total of sek 763 million in Ericsson
stock, including an extra allotment at a price of sek 19 per share.
Industrivärden believed that Ericsson’s strong position in mobile
systems would serve as a solid base for increased ventures into
services and the continued transition from fixed to mobile telecommunications.
Following lengthy and technically complicated negotiations, in
2004 a change was made in the voting rights for Ericsson’s Class
b shares, so that the voting rights difference against the Class a
shares was reduced from a thousand times to ten times.
129
Ericsson’s new issue in 2002 attracted
great publicity. Among the headlines
were: “Ericsson issue strongly oversubscribed” and “Limited decrease in power for
Ericsson’s Class A shareholders.”
Small, unlisted holdings sold
Streamlining entails sale of all unlisted holdings
a portfolio of small, unlisted shareholdings was built up in
the late 1990s, mainly with a focus on it and medical technology
companies.
The most significant unlisted holdings were:
• Ericsson Venture Partners, which acquired minority
stakes in European and American companies in the
mobile Internet segment
• Biodisk, which developed products for testing
resistance to antibiotics
Press clip from Dagens Nyheter,
August 10, 2002: “DHJ Media
dissolved as result of bankruptcy.”
• Establish, which developed logistics system solutions
• DHJ Media, which developed data systems that
display text and images on electronic screens
• Interpeak, which developed security software in
Internet-based embedded systems
During the first years of the 2000s, these shareholdings were either
liquidated or sold as part of the strategy to make the equities portfolio transparent and concentrated.
Press release dated June 25, 2002,
announcing Industrivärden’s sale of
Biodisk for a capital gain.
130
Acquisition of Icelandic company Össur 2002
Össur first investment under new strategy
in 2002 industrivärden acquired 15 percent of the shares in
the Icelandic orthopedics company Össur, a leading innovator of
prosthetics. Össur’s high-tech prosthetics enable users to
pursue an active life even after the loss of a limb.
Through company acquisitions in the u.s. and Sweden in 2000,
Össur expanded its operations to include a comprehensive offering
of market-leading prosthetic products.
Industrivärden saw great future opportunities for Össur’s technical know-how and major expansion potential.
The shareholding in Össur was sold in 2005 against the background of the company’s high valuation and low liquidity of its
stock. The sale generated a large capital gain.
131
Press release dated May 23, 2002,
announcing Industrivärden’s purchase
of 15 percent of the shares in Össur.
Headline (inset) reads: “Computerized
knee in step with Industrivärden.”
Short-term equity and derivative trading
established 2003
Market presence supports core business
over the years, short-term equity trading has been conducted by
various Industrivärden subsidiaries, such as Delus and Hindus. Trading
was temporarily discontinued in the early 1990s due to weak profitability.
Short-term trading was resumed in 2003 in the form of derivative transactions by Industrivärden, based on holdings in the equities
portfolio, and short-term equities trading by the subsidiary Nordinvest.
Industrivärden’s
short-term
trading includes
both derivative
transactions by
Industrivärden and
short-term equity
trading by Nordinvest. Photo from
Industrivärden’s
2002 Annual
Report.
These activities have been very profitable and have covered Industri­
värden’s management costs by a wide margin. During the five-year
period 2003–2007, Industrivärden’s short-term trading generated a
combined profit of approximately sek 600 million, while the company’s management costs during the same period amounted to roughly
sek 400 million. Even during the turbulent years in the stock market,
2008 and 2009, Industrivärden’s short-term trading generated satisfactory profits.
Measured in number of transactions, the short-term trading operations have expanded steadily since the start. Risk is limited by strict risk
mandates and by virtue of the fact that trading is mainly conducted in
stocks that are included in the scope of Industrivärden’s analysis model.
Apart from executing investment decisions, Nordinvest also provides daily market information to Industrivärden’s organization.
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Munters and Höganäs new holdings
More investments under new strategy
two new small shareholdings in listed companies were added
during the first half of the 2000s, namely, Munters in 2003 and
Höganäs in 2005. These purchases emanated from the structured
process for new investments, which involves an assessment of such
matters as a company’s value potential, market potential, strategic
positioning, capital efficiency, board of directors and management,
and possible operational improvements. In addition, the process
requires that Industrivärden can achieve a significant ownership position and that the stock market’s valuation is reasonable and allows
for favorable future growth in value.
Munters is a world leader in moisture control, with products for
water and fire damage restoration, dehumidification, humidification, and air cooling. Profitability has been good for many years.
The shareholding has been built up since 2003. In 2008 and 2009
Munters underwent restructuring as a result of the global economic
downturn, which led to poorer profitability.
Höganäs is a world-leading supplier of metal powders, which
are used to make components for the automotive industry and
electrical appliances for the home. Metal powders are also used in
various processes and as additives in other products. This shareholding has been built up since 2005.
Section headings from
Industrivärden’s 2006 Annual
Report: “Höganäs – Leading
producer of metal powders”
and “Munters – Strong global
position in humidity control.”
133
Industrivärden CEO Anders Nyrén
in a Q&A from Svenska Dagbladet,
August 17, 2005, responds to the
question: “What are your plans for
Höganäs?”.
Indutrade listed on stock exchange 2005
Confidence-inspiring market player after stock market introduction
Prospectus on the Indutrade initial
public offering.
Industrivärden CEO Anders Nyrén in a
Q&A from Svenska Dagbladet, April 21,
2005: “Why are you listing Indutrade?”.
indutrade was established in 1990 as a subsidiary of Industrivärden in connection with the purchase of all of the shares
in Nils Dacke. The activities of Dacke Handel were split from Nils
Dacke and given the name Indutrade.
Indutrade has its origins in the family company Bengtssons
Maskin, which Gunnar Tindberg sold to Nils Dacke in 1978. Other
companies that became part of Indutrade at an early stage were
Carlsson & Möller, G A Lindberg, the Colly Group, the Danish
company Bloch & Andresen, and the Dutch company hitma.
Following Industrivärden’s acquisition in 1991, Indutrade underwent
steady expansion through acquisitions in the Nordic countries, Germany and Benelux. Up until 2004 Indutrade was led by its founder,
Gunnar Tindberg. By then the Indutrade Group comprised some
sixty companies, with an operating profit of sek 256 million on
sales of sek 3.5 billion. Its expansion had taken place primarily
through acquisitions. Since 1978 approximately 40 company acquisitions had been carried out according to a tried-and-tested model
that involves identification, evaluation, negotiation, implementation
and follow-up.
Since is establishment Indutrade has been focused on marketing
and selling components, systems and services with a high-tech content to industries in selected niches. Most of the products are leaders in their respective segments. For Indutrade’s suppliers, value is
Dagens Industri, October 6, 2005:
“Time for IPOs instead of delistings.”
134
Dagens Industri, October 5, 2005: “Great start for Indutrade.”
created by offering them an effective sales organization with a high
level of technical expertise and established customer relationships.
Customers make up a cross section of industry, with a concentration in the paper, pulp and engineering industries.
Since 2002, Industrivärden’s strategic direction has entailed that
its wholly owned subsidiaries in industry and trading would be
divested entirely or in part in connection with a refocusing of the
business. For Indutrade, the choice came down to a merger with
another company or an initial public offering. After evaluating various options, in 2005 the decision was made to carry out an initial
public offering of Indutrade, whereby Industrivärden would stay on
as an active owner with an ownership interest of approximately 35
percent.
Indutrade’s stock market introduction received a very positive
reception by the stock market. The initial public offering was oversubscribed more than 12 times. Indutrade was listed on the stock
exchange on October 5, 2005. Industrivärden’s shareholding after
the ipo amounts to 37 percent of the votes and capital.
135
Article on Indutrade in Swedish business
weekly Affärsvärlden, September 28,
2005: “Trading house continues its
growth on the stock exchange.”
Isaberg Rapid sold 2006
Last wholly owned subsidiary sold
a strategic decision in 2002 entailed that the wholly owned
subsidiaries were to be sold as a step in the transformation of Industrivärden into a pure holding company.
Isaberg Rapid, which manufactures and sells a wide array of
staplers, was acquired by Promotion in 1980 and was among the
companies that Industrivärden acquired in 1991 through Investment
ab Bahco. Isaberg Rapid was very profitable for several years in the
1990s in connection with the launch of a new product – electric
staplers for oem installation in copying machines. Weak volume
growth, tougher price competition and low efficiency led to weakened profitability in the early 2000s. Extensive structural programs
were initiated in subsequent years, and profitability improved.
In 2006 Isaberg Rapid was sold to the venture capital company
Segulah for a small capital gain. Industrivärden had thereby sold its
last wholly owned subsidiary and was a pure holding company for
the first time since its founding.
Papper & Kontor, No. 1, 2007:
“Isaberg gets new owner.”
Press release from December 13,
2006, announcing Industrivärden’s
sale of its subsidiary Isaberg Rapid.
136
New issue by SSAB 2007
Financing for large company acquisition
industrivärden acquired stock options in ssab in 1992
in connection with the company’s privatization. The options were
exercised in 1994, and Industrivärden bought stock in ssab for sek
499 million.
ssab is a specialized steel company with a base in Western
Europe and North America. Its steel operations have been successfully developed through a calculated niche orientation as a leading
producer of advanced, high-strength sheet and quenched steels.
ssab has attained a strong market position in these areas, with high
profitability.
In 2007 ssab acquired the Canadian company ipsco, a maker of steel
plate and energy tubular products in
modern and efficient plants in the u.s.
and Canada. The aim of the acquisition
was to boost production capacity in the
areas in which ssab is a world leader,
and to develop ipsco’s product range to
include quenched steels and advanced,
high-strength steel and thereby strengthen ssab’s positions in the
North American market. The purchase price for ipsco was sek 50
billion. In 2008 the energy tubular products business was sold for
sek 25 billion. Through the acquisition, ssab went from being an
overcapitalized company to a company with a relatively high debtequity ratio.
A new issue that raised sek 10 billion for ssab was carried out
in 2007. Industrivärden guaranteed its participation and bought
additional shares through previously purchased warrants. In total
Industrivärden bought stock and warrants for sek 2,275 million.
These transactions illustrate Industrivärden’s philosophy of prioritizing profitable, active development of its portfolio companies
rather than relying on stock buybacks to lower overcapitalization.
137
Dagens Nyheter, May 10, 2007:
“SSAB acquires Canadian company in
multi-billion kronor deal.”
Substantial purchases of stock in Volvo
Long-term development opportunities from rising need for transports
volvo was long included in Industrivärden’s equities portfolio,
but the holding was sold in the early 1990s in connection with
Renault’s bid for the company.
Following the sale of Volvo Car Corporation to Ford, Trucks is
Volvo’s largest business area. Volvo’s other business areas are Buses,
Construction Equipment, Volvo Penta (marine engines, etc.), Volvo
Aero (aircraft engines) and Financial Services. The Trucks business
area as a whole is Europe’s largest and the world’s second largest
maker of heavy trucks, comprising the Volvo, Renault Trucks, Mack
and Nissan Diesel brands.
Industrivärden has a positive view of Volvo’s long-term development potential, which in essence is based on the greater need for
transports created by globalization. Apart from the sheer increase
in the number of product transports, growing prosperity in countries like China, Russia and India is also creating a greater need for
transports. Volvo is well positioned to benefit from this potential.
Moreover, Volvo is the world’s largest manufacturer of large diesel
engines, which provides a platform for synergies and development
opportunities for the other business areas.
Dagens Industri, May 10, 2007: “’Volvo an
interesting company’: Wealthy Industrivärden
flags for new major deals.”
Svenska Dagbladet,
February 16, 2007:
“Industrivärden fills tank
with Volvo shares.”
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Dagens Nyheter, January 19, 2007:
“Industrivärden ready to buy more
Volvo stock.”
Since 2004 Industrivärden has built up a holding in Volvo
that in 2009 corresponded to 8.5 percent of the votes. Most of the
purchases were made in 2007 and were financed by borrowing. The
global financial crisis that began in August 2007 culminated in February 2009, when the stock market index had fallen by 55 percent.
As a result, Industrivärden’s debt-equity ratio rose to a level that
temporarily exceeded the target of 20 percent of the market value
of the equities portfolio. Through strong performance of the stock
market since February 2009, the debt-equity ratio returned to the
scope of the long-term target.
Svenska Dagbladet, January 20, 2007:
“Industrivärden tightens grip on Volvo:
‘Never before has Industrivärden bought
so aggressively in a company’.”
Dagens Industri, October 11, 2008:
“Debt-financed Volvo purchase puts
pressure on Industrivärden.”
Industrivärden’s high debt-equity ratio in
2008 was gradually reduced in 2009.
Dagens Industri, November 3,
2009: “Nyrén tones down issue
risk: Industrivärden’s portfolio up
50 percent this year.”
139
Equities portfolio at year-end 2009
Ten holdings with combined value of SEK 54 billion
Equities portfolio
at December 31, 2009
Höganäs
Indutrade
Skanska
Munters
Handelsbanken
Volvo
Ericsson
Sandvik
SSAB
SCA
Equities portfolio at December 31, 2009
No. shares
Handelsbanken A
Handelsbanken B
Sandvik
SCA A
SCA B
SSAB A
SSAB B
Ericsson A
Volvo A
Skanska A
Skanska B
Indutrade
Höganäs B
Munters
Total
63,082,564
72,145
135,431,200
45,100,000
25,700,000
51,589,646
121,794
76,680,600
70,218,284
15,091,940
13,957,660
14,757,800
3,550,000
10,950,000
at year-end 2009 Industrivärden’s equities portfolio was made
up of ten holdings with a combined market value of sek 53.5 billion, which exceeded cost by sek 23.2 billion, or 76 percent. The
equities portfolio consisted of large holdings in Handelsbanken,
Sandvik, sca, ssab, Ericsson, Volvo, Skanska, Indutrade, Höganäs
and Munters – all of in which Industrivärden serves as an active
owner.
In terms of votes, Industrivärden is the largest owner of Sandvik, sca, ssab, Skanska, Indutrade and Munters, and the secondlargest owner of Handelsbanken, Ericsson, Volvo and Höganäs.
Most of these shareholdings have been included in the equities portfolio for a long time. Ericsson has been included in the
portfolio since Industrivärden’s foundation in 1944, sca since 1950,
Handelsbanken since 1963, Skanska since 1987, Indutrade since 1989,
ssab since 1994, Sandvik since 1997, Munters since 2002, Volvo
since 2004 (a previous stake was sold in the early 1990s), and Höganäs since 2004.
Market value
SEK billion
SEK/share
Share of
portfolio value, %
Share of capital
in company, %
Share of votes
in company, %
12.9
34
24
10.1
10.3
11.7
30
22
11.4
11.4
6.8
18
13
10.0
29.2
6.3
16
12
16.0
20.7
5.0
4.3
13
11
9
8
2.3
3.3
13.7
8.5
3.5
9
6
6.9
27.3
2.0
0.6
0.5
53.5
5
2
1
139
4
1
1
100
36.9
10.1
14.6
36.9
8.1
14.6
140
Convertible loan issued 2010
Increase in capital possible despite holding company discount
to strengthen industrivärden’s liquidity and provide
greater financial flexibility to capture attractive investment opportunities, in January 2010 Industrivärden’s board decided to make an
offering to institutional investors of senior unsecured convertible
bonds due in February 2015. The offering amounted to €450 million
and included an option for an additional €50 million, for a total of
€500 million, or slightly more than sek 5 billion.
The offering was said to strengthen Industrivärden’s ability
to maintain and create shareholder value while at the same time
taking advantage of an opportunity to access capital from primary
markets exhibiting strong demand for new issues, since the convertible instrument provided the opportunity to issue equity at a
premium to the current share price. In line with market practice for
Prospectus on the issue of convertibles.
convertible bond transactions in Europe, the bonds were marketed
principally to European institutional investors who have specialized knowledge of such instruments, entailing a departure from the
shareholders’ pre-emption rights.
The convertibles carry a coupon of 2.5 percent. Conversion to
Class c shares can take place from March 2010 to January 2015.
The original conversion price was sek 115.50, which is equal to the
volume-weighted average price of
Industrivärden’s Class c shares with a
premium of 37.5 percent, which corresponded to net asset value at the issue
date. The offering corresponds to 44.3
million new Class c shares based on
full conversion at the original conversion price, entailing dilution of Industrivärden’s capital by approximately 11
percent and votes by slightly less than
Dagens Industri, January 13, 2010, with photo
2 percent.
inset of CEO Anders Nyrén: “Industrivärden
gains new financial strength.”
Convertibles totaling €500 million
141
Online business news site E24,
January 12, 2010, featuring a
Q&A with CEO Anders Nyrén. The
headline reads “Industrivärden’s
loan secured.”
were issued in January 2010, at which time payment was received.
A large number of investors, mainly from the uk, France and
Switzer­land, participated in the issue. The offering was oversubscribed more than ten times.
An extraordinary general meeting on February 12, 2010, approved the terms of the issue of the convertible bond. The convertibles are quoted on the Euro mtf market on the Luxembourg Stock
Exchange.
At year-end 2009 the market value of Industrivärden’s equities
portfolio was sek 53.5 billion, and interest-bearing net debt was
sek 10.8 billion, corresponding to a debt-equity ratio of 20 percent.
If half of the proceeds from the bond were invested in listed stocks
and half were used to redeem less favorable loans, the debt-equity
ratio would initially rise to 24 percent, but would fall to 15 percent
after conversion of the loan.
From the shareholders’ perspective, the convertible has increased
the liquidity of Industrivärden’s stock and spurred greater interest
in the company. Industrivärden’s cash flow improved through the
low interest cost for the convertible and higher dividend income.
If Industrivärden’s share price does not reach the conversion price
during the term of the convertible, the loan can be repaid at the
issue price.
142
INTERVIEW
Anders Nyrén
president and ceo, board member since 2001
You commissioned a study in 2001 to look into the advantages
and disadvantages for Industrivärden of being a mixed vs. pure
holding company. Can you summarize the main reasons why
Industrivärden should gradually transform itself to a pure holding
company and at the same time be a more active owner?
The idea behind the wholly owned industrial operations was that
they could contribute stable cash flow. By becoming a pure holding
company, we clarified our strategy.
The key to success for Industrivärden is to have a professional
investment operation and active ownership. Our investments
should essentially be focused on large and midcap listed companies.
The portfolio companies should have conditions for long-term
good profitability and cash flows. This strategy also entails that Industrivärden should not involve itself in venture capital investments.
The change toward becoming more of a holding company than
an equity management company entailed shifting the organization’s focus more toward investment activities than on strict equity
analysis, which led to a reorganization in 2002.
Along with responsible, active ownership and long-term perspective come a power position, which is a prerequisite for our strategy.
In a nutshell, Industrivärden works in the public arena between
pure-play venture capitalists and structural transformers of mature
companies.
What do you think about the investments in Lundbeck and Skandia, which were started before your time but which were divested
under your direction?
Based on the business concept that Industrivärden should be a
distinctly active owner with large shareholdings, it was natural to
divest the holdings in Lundbeck and Skandia. A foundation was
the entirely dominant owner of Lundbeck, and in Skandia we
owned less than 5 percent of the votes and capital. The Lundbeck
143
Anders Nyrén served as Executive Vice
President and CFO of Skanska from
1997 to 2001, Executive Vice President
and CFO of Securum from 1992 to
1996, and President of OM Interna­
tional from 1987 to 1992.
Anders Nyrén is currently Vice
Chairman of Handelsbanken and
Sandvik, and a director on the boards
of Ericsson, SCA, SSAB and Volvo.
holding was sold near its price peak and was a very good deal for
Industrivärden. I had a hard time understanding the concept of
embedded value at Skandia, involving discounted future profits, but
the investment organization believed in a further upside. The stock
was therefore sold long after its price had peaked. The investment
organization’s way of working has since been changed. The proceeds
from these sales were subsequently used for complementary purchases of stock in Handelsbanken, Sandvik and sca.
One of the first measures that was taken after you took office in
2001 was to cancel the cpn loan that was raised in connection with
the acquisition of plm in 1987. Tell us about the reasons for cancel­
ing the cpn loan.
The cpn loan was raised in connection with the acquisition of plm
in 1987 and was suited for the tax rules that applied at the time.
Once interest payments and dividends rendered were given equal
tax treatment, there was no reason to keep the cpn’s, which also
had low trading volume. Through the redemption process, we also
reduced the number of Industrivärden securities in issue so that all
that remained were the Class a and Class c shares.
The first major divestment that you had done was the sale of Besam
in 2002. Tell us about the process that led to Assa Abloy’s acquisition
of Besam for sek 3.2 billion, corresponding to a p/e multiple of 21.
A key part of Industrivärden’s new strategy was to sell the wholly
owned subsidiaries to industrial owners. Besam was a highly international company with good growth and high profitability. In addition, interest in Besam was strong. The foremost suitors were the
Finnish company Kone, which saw great value in Besam’s service
concept, and Assa Abloy, which saw Besam’s automated doors as a
complement to its product portfolio. Besam was sold to Assa Abloy
for a considerable capital gain. The company has since then developed well as part of Assa Abloy.
The stock market climate deteriorated substantially from 2001 to
2003, and Ericsson in particular was hit hard by lower demand in
the telecom sector. Tell us about the considerations that led to the
large, new issue of sek 30 billion in 2002, of which sek 3 billion
was guaranteed by Industrivärden.
144
Telecom operators were paying highly inflated prices for 3g licenses
in the early 2000s, and Ericsson’s market disappeared. As a result,
in a couple years’ time Ericsson went from being a strongly expanding company to a company in crisis. A rescue effort was needed to
ensure its survival. A new issue of sek 30 billion, mainly Class b
shares, was carried out with a guarantee from the principal owners
Investor and Industrivärden. The principal owners thereby showed
that they took responsibility for the company. For all who subscribed for shares in 2002, the investment has been a very good one.
The large voting rights difference in Ericsson’s stock – with the
b-shares worth only one-thousandth of a vote, was changed after a
lengthy debate. How were Ericsson’s Class a shareholders compensated when the voting rights difference was reduced to one-tenth
of a vote for the b-shares?
The difference in voting power for the Class a and b shares was not
changed until 2004. To compensate holders of Class a shares for
the value that they relinquished as a result of the reduction in the
voting rights difference, they were given the right to convert their
b-shares to a-shares, which Industrivärden did. Industrivärden’s
share of the votes thereby decreased from 28 percent to 13 percent.
The first stock purchase under the new strategy involved a large
block of shares in the Icelandic orthopedics company Össur, which
were bought in 2002 and sold in 2005. What was the background to
this investment, which was sold after only three years?
A systematic analysis of large and midcap Nordic companies that
we performed showed that Össur was clearly undervalued, so we
bought 15 percent of the company’s stock. We sold the shares after
only three years due to their low liquidity and because we had doubts
about a major acquisition that was planned in the u.s. Össur was a
good deal for us, since we doubled our money in a short time.
One successful initiative was the establishment of short-term
derivative and equity trading by Nordinvest in 2003. Why has this
activity has been so successful?
In my previous positions at Securum and Skanska, I was responsible for building up a trading business and felt that short-term
trading was also needed at Industrivärden.
145
We drew up a business plan and recruited competent people.
The business, which involves derivative trading by Industrivärden
and short-term equity trading by Nordinvest, has been very successful. Since the start in 2003, the combined profit has amounted
to more than sek 700 million, which has covered our management
costs by a wide margin.
Two new small shareholdings were acquired during the 2000s,
namely, Munters in 2003 and Höganäs in 2005. Describe the process behind these two acquisitions.
Both Munters and Höganäs clearly met our criteria for strong cash
flow and potential for international expansion. However, the target
values have not been reached, mainly because of the recent years’
recession. In addition, Munters has encountered its own problems
in the Moisture Control Services division, which has given rise to
substantial structural costs. Höganäs has been hurt by its exposure
to the auto industry.
The initial public offering for the industrial trading company
Indutrade in 2005 was highly successful and was oversubscribed 12
times. What considerations lay behind the decision to list Indutrade?
Indutrade had a long record of profitable growth and had achieved
suitable size for a stock market introduction. Plus, it was part of Industrivärden’s new strategy to divest its wholly owned subsidiaries.
Indutrade’s ipo was the first after the it crash at the start of
the 2000s. Our advisors were nervous, and Indutrade’s stock was
offered at a very favorable price. The project work ahead of the ipo
was tough, and time was short. Indutrade’s long-sitting ceo, Gunnar Tindberg, had been succeeded by Johnny Alvarsson, who has
continued to carry out company acquisitions at a steady pace. Today
Indutrade has some 100 subsidiaries, compared with about 65 at the
time of the ipo in 2005.
The last divestment of a wholly owned subsidiary under Industrivärden’s strategy to transform itself into a pure holding company
was the sale of Isaberg Rapid in 2006. What was the background
to Segulah’s acquisition of Isaberg Rapid? Do you have any comments on Segulah’s sale of Isaberg Rapid to Esselte in 2009?
146
Our last wholly owned subsidiary, Isaberg Rapid, was a relatively
small company and was struggling with profitability and management problems. A restructuring program was carried out under the
direction of Industrivärden’s executive vice president, Bengt Kjell.
The venture capital company Segulah acquired Isaberg Rapid
in 2006 and continued the restructuring work. After a few years,
Segulah sold Isaberg Rapid to Esselte, which – by the way – was
interested in acquiring the company in 2005, but we couldn’t reach
an agreement.
Including the earn-out payment, Industrivärden made a good
capital gain from the sale of Isaberg Rapid. Plus, the company had
made substantial group contributions for some time during the
1990s, when copying machine staplers were a very profitable product.
Industrivärden bought stock in ssab in 1994 in connection with
that company’s privatization. Give us some background on ssab’s
acquisition of the American company ipsco in 2007 for sek 50
billion. What did Industrivärden think about ssab’s major acquisition?
The ipsco deal was very stimulating to follow. ssab was bent on
securing a global niche strategy, either through company acquisitions or by investing in new capacity. As ssab’s new ceo, Olof
Faxander laid out an acquisition strategy for the board. If we hadn’t
acted, ssab might well have been acquired.
ipsco has very modern plants in the u.s. and Canada. The
calculation was based on acquiring the entire company and thereafter selling the energy tubular products business, which ssab was
not interested in. The purchase price amounted to sek 50 billion, of
which sek 25 billion was financed by the sale of the energy tubular
business and sek 10 billion was financed by a new issue. Industri­
värden guaranteed its share of the issue and also bought warrants,
so our total equity investment amounted to sek 2.3 billion.
Industrivärden was a minor shareholder of Volvo for many years,
but that holding was sold in the early 1990s in connection with
Renault’s bid for Volvo. Tell us about the analysis of Volvo that
led to the large purchases of Volvo stock that Industrivärden has
147
made since 2004. What do you have to say about the fact that debt
financing of the large purchases in 2007 caused Industrivärden’s
debt-equity ratio to exceed 30 percent in 2008?
The need for transports is rising continuously. Heavy trucks are
ideal for transports between urban centers. Volvo has a global position that enables synergies through standardized manufacturing.
Plus, Volvo is the world’s largest manufacturer of diesel engines,
which gives it a position of strength when it comes to meeting
emission standards.
We have bought Class a shares at varying prices. The purchases
we made in 2007 were at relatively high prices, and as a result, the
debt-equity ratio grew a bit high in 2008 when the stock markets
fell. I am convinced that over time our involvement in Volvo will be
very good for Industrivärden.
Can you give some concrete examples of how Industrivärden has
behaved as an active owner in the various portfolio companies in
recent years?
I can give a long list of examples of how Industrivärden has served
as an active owner. In particular I’d like to point out how Handelsbanken’s new management, with the strong support of the board
and Industrivärden, carried out the divestment of spp.
Other examples include ssab’s acquisition of ipsco, structural measures at Sandvik Materials Technology, sca’s acquisition
of Procter & Gamble’s European tissue operations, Indutrade’s
continuous company acquisitions, Ericsson’s structural program and
Skanska’s investments in infrastructure development.
Could you give us some background on Industrivärden’s issue of
convertibles for €500 million, or more than sek 5 billion, in January 2010?
Industrivärden issued a loan in the euro market with very favorable
terms and a low interest rate, which gives the creditors the right to
convert the loan to shares at a price corresponding to current net
asset value. If conversion is made to stock, then we will have shown
that it is possible to increase Industrivärden’s equity despite the
holding company discount, which is a hindrance to traditional new
issues.
148
INTERVIEW
Tom Hedelius
chairman of the board since 2001
board member since 1991
You have been a director on Industrivärden’s board for nearly 20
years, of which as chairman for almost eight years. What are the
most memorable events or deals that you were involved in during
this time?
As chairman of the board I have strived to transform Industri­
värden into a pure holding company with a fully transparent equities portfolio. My goal has also been to ensure that Industrivärden
has a lean and efficient organization that is financed by short-term
equity trading with limited risk.
Among the larger deals that I recall in particular was the investment in ssab, which has been very good. The purchase of stock in
Sandvik has also been very successful; today Sandvik is a key holding in the portfolio.
When you were elected as a board member in 1991, Industrivärden
was a distinctly mixed holding company, with half of its assets in
wholly owned engineering, trading and property companies. Today
Industrivärden is a pure holding company with shareholdings only
in listed companies. Can you describe the considerations made
by the board that led to the gradual concentration of the equities
portfolio?
It’s hard to assess the value of a holding company’s wholly owned
subsidiaries. In addition, it’s hard to recruit talented management
for unlisted subsidiaries. On top of this, a staff of industrially qualified people is needed in the holding company.
Against this background, it made sense to gradually transform
Industrivärden into a pure holding company with a fully transparent equities portfolio.
You were vice chairman of Ericsson’s board and a member of the
finance committee for a long period of time. Can you give us an
account of the events that led to the large new issue in 2002?
149
Tom Hedelius was President and CEO
of Handelsbanken from 1978 to 1991,
and Chairman of the bank from 1991
to 2001. Today he is a director on the
boards of L E Lundbergföretagen and
SCA, among other things. From 1991 to
2003, Tom Hedelius was Vice Chairman
of Ericsson, and from 1994 to 2009 he
was a director on Volvo’s board. From
1981 to 1999 he was a director on AGA’s
board, and in 1991 he sat on the board
of Investment AB Bahco.
Tom Hedelius is also the largest owner
in terms of votes and Chairman of B&B
Tools, and the largest owner in terms of
votes and Vice Chairman of Addtech and
Lagercrantz Group. All of these are listed
companies.
The telecom industry suffered a sharp decline in the early 2000s.
Demand for Ericsson’s products and systems fell dramatically. We
were forced to halve the number of employees. A new issue was
necessary for Ericsson’s survival. Industrivärden guaranteed 10
percent of the issue amount of sek 30 billion. The issue was fully
subscribed, however, and Industrivärden’s subscription of shares
totaled approximately sek 800 million.
What is your view of Industrivärden’s involvement in Ericsson and
the large change in voting rights that was made in connection with
the new issue?
Industrivärden’s close involvement in Ericsson has been of great
value. The change in voting rights was not made until 2004 after
lengthy and complicated negotiations. Industrivärden’s share of the
votes decreased from 28 percent to 13 percent, but is still significant.
Short-term equity and derivative trading was established in 2003 in
the subsidiary Nordinvest, which has shown very good profitability
and has covered Industrivärden’s management costs since the start.
Any comments?
The goal is that Nordinvest would cover Industrivärden’s management costs in a structured manner and with limited risk. This has
been amply achieved.
In what way did Industrivärden serve as an active owner in connection with ssab’s acquisition of the American company ipsco in
2007 for sek 25 billion, net, which was financed by a new issue of
sek 10 billion?
The ipsco deal was carried out with great enthusiasm from ssab’s
management. It was a very large acquisition, totaling sek 50 billion,
and was based on being able to sell part of ipsco for half of the
purchase price, which was also successful.
Industrivärden bought stock for sek 2.3 billion in ssab’s new
issue of sek 10 billion, which was also part of the financing of the
ipsco acquisition.
Industrivärden was a small shareholder of Volvo for many years,
but sold its holding in connection with Renault’s bid in the early
1990s. In 2004 Industrivärden began building up a new, large posi-
150
tion in Volvo, mainly through debt financing. You have followed
Volvo’s development as a member of the company’s board for many
years. What is your long-term view of Volvo’s development?
I joined Volvo’s board in 1994 on a personal mandate after P G
Gyllenhammar’s departure, since Industrivärden had sold its
shareholding. Volvo Car Corporation was sold to Ford during this
period for a good price.
Today Volvo is facing a deep slump in demand and has weak
profitability. But I believe that Volvo is a company for the future,
with high market shares in all of the segments it works in. Plus,
Volvo is the world’s largest manufacturer of large diesel engines.
The debt financing of the Volvo stock purchases in 2008 caused
Industrivärden’s debt-equity ratio to temporarily exceed 20 percent, which is the target set by the board. What comments do you
have on the attention that this temporarily high debt-equity ratio
attracted?
It is natural that the debt-equity ratio will exceed the long-term
target at some time over a business cycle. Given the positive stock
market climate in 2009, Industrivärden has benefited in other respects from the leverage created by its borrowing.
What can you say about the background and activities of one of
Industrivärden’s largest owners, namely, the Jan Wallander & Tom
Hedelius foundation?
The foundation was established in connection
with Jan Wallander’s 50th birthday. Since then,
allocations have been made to the foundation by
Handelsbanken on various occasions in connection with Jan’s and my own birthdays. For natural
reasons, the foundation’s funds have been invested
in Handelsbanken and Industrivärden stock.
The Wallander & Hedelius foundation is a
benevolent foundation that grants some sek 140
million every year to economics research. I am
also chairman of the board of the scientific council that awards the research funds.
151
Handelsbanken’s website, describing the purpose of the Jan
Wallander and Tom Hedelius Foundation: “To support social
sciences research primarily in the fields of economics history,
economics geography, business economics, national economics
and econometrics.”
What do you think about the fact that foundations related to Handelsbanken and sca have large shareholdings in Industrivärden,
which explains why the chairmanship at Industrivärden has gone
back and forth between representatives from Handelsbanken and
sca?
It is natural for one of the largest owners to hold the chairman’s
seat.
Through various foundations that are related to Handelsbanken
and sca, the so-called Handelsbanken sphere today holds slightly
more than 50 percent of the votes in Industrivärden, while L E
Lundbergföretagen with related parties has roughly 17 percent of
the votes. For the past few years, Industrivärden and Lundberg
have each had representatives on each other’s boards. How is the
cooperation between L E Lundbergföretagen and the Handelsbanken sphere?
The cooperation works absolutely fine. We have a shared view on all
essential matters.
How would you characterize Industrivärden with a few key words?
I can list them as follows:
• long-term perspective
• active work on the boards of the portfolio companies
•p
rofessionalism of the board, based on long records of business
experience
• good spread of risk in the equities portfolio
• low management costs financed by short-term equity transactions
• orderliness
In short, Industrivärden should be a company that is easy to understand.
152
INTERVIEW
Sverker Martin-Löf
vice chairman since 2002
deputy board member 1993–1996, board member 1996–1997
You were a deputy board member as well as a board member for a
few years in the 1990s. Why did you leave the board in 1997?
I left Industrivärden’s board in 1997 when control of Custos, which
was a major shareholder of sca, had gone over to Öresund. There
was thus no longer a shared view about sca between the principal
owners Industrivärden and Custos.
What do you think about the fact that Industrivärden’s equities
portfolio today is concentrated on minority holdings in ten, well
known listed companies, in view of the fact that Industrivärden
had a large, wholly owned industrial and trading operation when
you became a deputy board member in 1993?
In the mid-1990s Industrivärden had a relatively extensive wholly
owned industrial operation. The idea was that the operating subsidiaries would contribute cash flow to the investment activities.
Over time, the cash flow became smaller at the same time that the
subsidiaries put demands on Industrivärden for industrial competence.
Transparency in the equities portfolio is important for a holding
company, and today Industrivärden is fully transparent, owning only
listed stocks.
You were chairman of aga when the company was sold to the German company Linde in 1999. Can you briefly describe the considerations that were made in connection with the sale, given the
restructuring of the gas industry that was taking place at the time?
I had been a member of aga’s board since 1989, and the idea was
that I would temporarily take over as chairman after Sven Ågrup,
who had held the gavel for many years.
aga’s profitability had deteriorated over a period of several
years, and the company fell behind its competitors. The situation grew complicated when the Swiss company Gas Vision, with
153
Sverker Martin-Löf was CEO of
SCA from 1988 to 2002. Today he
is Chairman of SCA, Skanska and
SSAB, Vice Chairman of Ericsson,
and a director of Handelsbanken,
among other things.
financier Martin Ebner, established itself as aga’s largest owner.
Gas Vision was pushing for aga to venture into medical gases in
the near term. Gas Vision had held separate meetings with aga’s
management. The company’s long-term strategic work suffered.
In 1999 a number of structural deals took place in the gas
industry. The French company Air Liquide and Britain’s boc tried
to merge, but were blocked by the eu. aga considered a merger
with the American company Praxair through a share swap. It was
at this time that Ebner took up contacts with Germany’s Linde,
which after negotiations made a bid for aga, which Industrivärden
accepted.
Linde has become a good owner for aga and the deal is a good
example of a successful merger.
What do you think about Industrivärden’s long-term involvement
in Ericsson? What comments do you have on the fact that foreign
interests hold a majority of Ericsson’s capital, but that Swedish
institutions have a clear majority of the votes?
Ericsson is a great company! The telecom market is characterized
by rapid technological change. The market is tough and complex.
Ericsson has superb technical know-how and a major international
presence.
The Swedish principal owners have always taken their responsibility during various crises at Ericsson. Both Industrivärden and
Investor have dedicated extensive work to Ericsson’s board.
Ericsson is a very attractive company, but unfortunately its stock
has performed unsatisfactorily during the last ten years. Compared with its Western competitors, Ericsson today is the strongest
company and is the leader in technological development. The main
competition is now coming from China.
Unfortunately, the market’s confidence in Ericsson has decreased due to the major losses in the mid-2000s and the profit
warning in 2008.
Viewed from a longer time perspective, the Swedish principal
owners have been guarantors for Ericsson’s development and continued existence.
154
Can you describe the background to ssab’s acquisition of the Canadian company ipsco in 2007?
When I took office as chairman of ssab in 2003, we held a discussion in Industrivärden’s board and decided to regard ssab as a
long-term core holding.
ssab had previously shifted its focus to the high-strength
specialty steels niche. Achieving a global position in high-strength
steel would require acquiring an American steel company to penetrate the markets in the u.s. and Asia.
ssab’s new management team, headed by ceo Olof Faxander,
was instructed to find a suitable acquisition candidate. The only
conceivable alternative was Canada’s ipsco, which has modern
plants in Alabama and Illinois. ipsco also had a large energy tubular products division, which ssab was not interested in. Acquiring
all of ipsco was a bit much and would require being able to sell the
energy tubular products business.
ipsco had several suitors, but ssab’s sek 50 billion offer was
accepted after a complex bid process, which was based on thorough
due diligence. A new issue of sek 10 billion by ssab was necessary
in the event the energy tubular products business could not be sold.
It took some time to sell the tubular business, since it was not
legally separated from the other operations. In the end, we received
a favorable offer of sek 25 billion from a Russian steel company,
and what thereafter remained in ipsco were the two American
steel plants that we were mainly interested in.
A good balance has been achieved between ipsco and the
original ssab. However, the financial crisis since autumn 2008 led
to a sharp drop in demand in the steel industry in 2009, and ssab
posted a loss. The capex program at ipsco has therefore been delayed somewhat.
In time the need for specialty steel will certainly rise again. The
Asian market is growing the fastest, and production in Asia may be
considered for ssab at a later stage.
What is the main thing that distinguishes Skanska from other construction companies?
Skanska is the only truly international construction company in
Sweden, with half of its operations in the u.s. and considerable
activities in the uk and Eastern Europe. Skanska also conducts
155
extensive residential construction in the Nordic countries and Eastern Europe, pared with a large commercial property development
operation.
In addition, for the past few years Skanska has been involved
in infrastructure projects together with other investors, such as
hospitals, schools and prisons in the uk, and highways in Norway,
Finland and Chile.
In summary, Skanska is an internationally active construction
company with major breadth in construction and project work.
How would you characterize sca today?
Previously a traditional forest company, today sca is mainly focused
on tissue and hygiene products. The main building blocks of today’s
sca, with a focal point on hygiene products, were the acquisitions
of Mölnlycke in 1975 and the German company pwa in 1995. The
company has become established in most geographic markets.
Growth opportunities in the hygiene segment are very favorable.
Hygiene products are an area of ever-greater focus for sca.
sca’s packaging products are mainly targeted at the European
market, which currently has considerably better balance than for a
few years ago, when price competition was fierce.
The forest products business operates largely as a raw material
producer that supplies the other product areas, although it also
produces a sizable volume of high-quality publication papers.
All in all, sca has an entirely different product portfolio than its
peer European forest companies. Its main competitors are international companies like Procter & Gamble and Georgia Pacific.
Since 2004 Industrivärden has built up a large position in Volvo.
How well do you feel that Volvo has held up against the sharp drop
in demand in 2008/2009? What is your long-term view of Volvo’s
development?
When the financial crisis unfolded in autumn 2008, there was an
extreme reaction in the markets for heavy trucks and construction
machinery. As a result of large surplus inventories and difficulties
for buyers to obtain financing, demand virtually disappeared. Volvo
responded by slashing its inventory and stopped certain investments in order to obtain balance in its cash flow. A large capacity
reduction was necessary, which hurt the company’s subcontractors.
156
Volvo has good products, high market shares and first-rate
product development. The worst profitability slump should now be
over. Over time, Volvo has very strong potential for positive development.
Industrivärden’s large investment in Volvo is right on the mark,
over time.
sca has been a large shareholder of Industrivärden since the early
1970s, both through direct ownership and through related foundations. Its direct ownership has now been dissolved. What do you
think about sca, as an industrial company, investing substantial
capital in Industrivärden shares?
Today it is sca’s pension foundations that have large ownership
stakes in Industrivärden, whose equities portfolio includes some of
the finest companies in Swedish industry and thus a good spread of
risk. For sca’s employees, as well, it is important that their pension
foundations can contribute to stable ownership of sca.
157
Industrivärden as long-term owner
THEME
since its founding, Industrivärden has been a dominant owner
of companies, for which it has taken a special ownership responsibility and regarded the shareholdings as an effective way of creating value. Of Industrivärden’s original seven shareholdings, board
members of Industrivärden have served as chairman or directors for
all seven.
In Industrivärden’s business model (see page 192), active ownership is described as follows:
Industrivärden’s influence in its portfolio companies emanates
from significant ownership stakes and a strong position of trust.
From this platform, an active ownership role is exercised through
interaction with other major owners in the aim of finding ways to
build value in the shareholdings. Active ownership is exercised by
the directors on the boards of the portfolio companies who
have ties to Industrivärden, through participation on the respective companies’ nominating committees, and through direct dialog
between Industrivärden’s investment organization and leading
representatives of the portfolio companies. At least one director
with ties to Industrivärden normally sits on the board of a portfolio
company. Normally the preference is for Industrivärden to have the
role as chairman of the board as well as chairman of the nominating committee.
158
At year-end 2009 the equities portfolio was made up of the following ten holdings, in which Industrivärden is a large owner
and conducts active ownership. In addition, Industrivärden has a
representative on the respective companies’ nominating committees, who in eight of the ten portfolio companies is chairman of the
committee.
Year first
stock purchase
made
Share of
capital, %
Share of
votes, %
Handelsbanken
1963
10.1
Sandvik
1997
SCA
Board members with
ties to Industrivärden
Represents Industrivärden on
the nominating committee
10.3
Anders Nyrén (vice chairman),
Fredrik Lundberg (vice chairman)
and Sverker Martin-Löf
Carl-Olof By (chairman)
11.4
11.4
Anders Nyrén (vice chairman)
and Fredrik Lundberg
Carl-Olof By (chairman)
1950
10.0
29.2
Sverker Martin-Löf (chairman),
Tom Hedelius and Anders Nyrén
Carl-Olof By (chairman)
SSAB
1994
16.0
20.7
Sverker Martin-Löf (chairman)
and Anders Nyrén
Carl-Olof By (chairman)
Ericsson
1944
2.3
13.7
Sverker Martin-Löf (vice chairman)
and Anders Nyrén
Carl-Olof By (chairman)
20041
3.3
8.5
Finn Johnsson (chairman)2 and
Anders Nyrén
Carl-Olof By
Skanska
1987
6.9
27.3
Sverker Martin-Löf (chairman),
Finn Johnsson and Bengt Kjell
Carl-Olof By (chairman)
Indutrade
1989
36.9
36.9
Bengt Kjell (chairman)
Carl-Olof By (chairman)
Höganäs
2002
10.1
8.1
Bengt Kjell
Carl-Olof By
2002
14.6
14.6
Bengt Kjell
Carl-Olof By (chairman)
Holding
Volvo
Munters
1
Volvo was included in Industrivärden’s equities portfolio for many years, but was sold in the early 1990s in connection with Renault’s bid for Volvo.
2
Finn Johnsson was Chairman of Volvo until January 15, 2010, when he was succeeded by Louis Schweitzer.
159
Industrivärden as an equity investment
industrivärden’s goal is to generate high growth in net asset
value over time and thereby give the shareholders a total return
which, over the long term, is higher than the average for the Stockholm Stock Exchange. Industrivärden has achieved this goal.
Industrivärden works according to a well-established model
for structured investment activities and active value creation in its
portfolio companies. Using this as a base and with a long-term approach, Industrivärden has generated favorable growth in net asset
value in both the short- and long-term perspectives. This favorable
performance, combined with the company’s policy of paying a dividend yield that is higher than the average for the Stockholm Stock
Exchange, has enabled Industrivärden to deliver an attractive and
competitive total return to its shareholders
THEME
Industrivärden as an equity investment 1945–2009
10 000
Industrivärden SEK 5,460
1 000
Return index SEK 2,880
Logarithmic scale
100
10
1
1945
1950
Industrivärden A
1960
1970
1980
1990
2000
2009
Total return index
An investment in Industrivärden of SEK 1 in 1945 would have grown, including reinvested dividends, to SEK 5,460 in 2009, compared with SEK 2,880 for the index.
160
For long periods of time – including the entire time since the
company’s stock market introduction in 1945 – Industrivärden’s
stock has generated a higher total return than the average for the
Stockholm Stock Exchange.
Average growth in net asset value1)
Five years
(2005-2009)
Ten years
(2000–2009)
Twenty years
(1990–2009)
Net asset value, %
3
-3
6
Net asset value
incl. reinvested dividends, %2)
7
1
10
1)
2)
Average per year.
Taking into account reinvested dividends, a measure of total value growth is obtained, i.e., how
net asset value would have developed if dividends had remained in the company and grown in
pace with the equities portfolio.
Industrivärden compared with return index (SIXRX)
Annual total return3)
Class A, %
Class C, %
Return index, %
65 years (since stock market listing)
14
–4
13
20 years
10
12
10
15 years
14
14
12
10 years
4
4
2
5 years
5
6
10
3)
4)
Growth in value including reinvested dividends.
The Class C shares were listed in 1988.
161
The eternal issue of the
holding company discount
THEME
by holding company discount is meant that the stock market,
with few exceptions, assigns a value to a holding company that is
below net asset value, by which is meant the market value of the equities portfolio less net debt. The holding company discount makes
it impossible for a holding company to carry out new issues itself,
since the investors would suffer an immediate drop in the value of
their invested capital. This phenomenon is general and applies in
most countries at various points in time. The discount is particularly
sizable for equity funds with entirely transparent shareholdings, i.e.,
closed-end funds. One general reason for the discount is that investors buy into a share of assets that they have not composed themselves and are therefore not interested in equally. A number of various factors are usually named as other underlying reasons, of which
several are statistically significant according to various studies:
Factors that decrease the discount
Cover of Swedish business weekly Affärsvärlden, February 7, 1996, with feature
article saying “The market is wrong.”
in reference to the debate surrounding
Industrivärden’s discount to net asset
value.
The high holding company discount
has gradually decreased since the mid1990s.
• control positions in the holdings
• easily valued assets in the form of listed holdings
• active ownership through board work
• favorable taxation of the holding company
• high gearing by the holding company
Factors that increase the discount
• unlisted holdings that are difficult to value
• low liquidity of the holding company’s stock
• minority positions with low liquidity
• concentration of ownership in the holding company
• cross ownership between the holding company and
its portfolio companies
• “perpetual” holdings
162
Dagens Industri, February 18,
2005: “Discount narrows for
Industrivärden.”
To create value, Industrivärden has gradually refined its business
focus by divesting subsidiaries and reducing the number of unlisted
securities. This process has taken place since the start of the 1990s
and has led to a significant lowering of the holding company discount, as shown in the graph below.
Holding company discount
%
40
35
30
25
20
15
10
5
78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94
95 96 97 98 99 00 01
02 03 04 05 06
07 08
09
The holding company discount is defined as the difference between net asset value and the share price, measured in relation to
net asset value.
163
A brief history of the five largest
shareholdings
THEME
at year-end 2009 Industrivärden’s five largest shareholdings, by
order of size, were Handelsbanken, Sandvik, sca, ssab and Ericsson.
Handelsbanken
A newspaper notice announcing the
start of business for Handelsbanken on
July 1, 1871.
Stockholms Handelsbank was established in 1871 following a conflict within Stockholms Enskilda Bank, when eight board members
resigned and formed their own bank, which was long commonly referred to as “the Divorced Bank.” In the opening years of the 1880s
the bank acquired a new president, Louis Fraenckel, who would
head the bank until 1911. Fraenckel was strongly focused on higher
profitability, and one of his strategies was to put greater emphasis
on bond and currency transactions. Upon Fraenckel’s departure,
Handelsbanken was Sweden’s number two business bank.
In 1914, expansion outside of Stockholm was initiated through
the acquisition of a bank called Norra Sverige. The business was
organized into the Stockholm operations and the Province operations. This organization remained intact until the end of the 1960s.
Expansion continued through the acquisition of Norrlandsbanken
in 1917 and Södra Sverige in 1919.
During the financial crises of the 1920s and ’30s, Handelsbanken
took over majority shareholdings in several Swedish industrial
companies in order to protect loan receivables. In 1943 those shareholdings were transferred to the newly formed holding company
Industrivärden.
Handelsbanken’s expansion continued during the 1940s and ’50s
through the acquisition of a number of provincial banks as well as the
mortgage company sigab. The last major acquisition of a provincial
bank was made in 1990 through the purchase of Skånska Banken.
In the late 1960s Handelsbanken suffered a crisis, and new
management was installed. Jan Wallander, from Sundsvallsbanken,
was appointed as the new president and decided to implement an
164
extensive decentralization of the bank’s organization. The branches
were organized into a number of regional banks with independent
positions. The budgeting system was eliminated, and a new, financial control system was adopted with focus on profitability. Since 1972
Handelsbanken has achieved its goal of being more profitable than
the average for Sweden’s other listed banks. To promote long-term
perspective and encourage employee performance, a profit-sharing
system was introduced, with payment deferred until retirement.
Since 1998, the Oktogonen foundation has owned 10 percent of the
votes in the bank and is today Handelsbanken’s largest owner.
In 1985 the cap for bank lending was removed, which led to
an overly rapid credit expansion. A large share of lending went to
speculative real estate investments. In autumn 1990 a severe bank
crisis unfolded, and the Swedish government was forced to provide
extensive support to the banking industry. Handelsbanken was the
only major Swedish bank that did not receive or consider receiving
government support.
In 1997 Handelsbanken took advantage of its strong capital
situation to acquire the mortgage lender Stadshypotek.
Starting in 1991, a base of business was built up abroad by
exporting Handelsbanken’s successful model of running bank
branches in Sweden. Establishment took place through organic
growth of new branches in Norway, Finland, Denmark and the uk,
complemented by small company acquisitions.
Handelsbanken expanded into life insurance through acquisiHandelsbanken 2000–2009
40 000
20000
20
000
18000
16000
15 000
14000
12000
30 000
20 000
10000
10
000
8000
10 000
6000
54000
000
2000
0
0
00
01
02
03
Total income, SEK M
165
04
05
06
07
08
Operating income, SEK M
09
The octagon has
long served as
Handelsbanken’s
symbol.
tions of the life insurance companies rka in 1992 and spp in 2001.
spp’s broker-led business model proved to be hard to blend with Handelsbanken’s branch-based model, and as a result the company was sold
in 2007 for sek 18 billion, generating a capital gain of sek 4 billion.
An international financial crisis caused by rampant credit
expansion led to major losses for Swedish banks in 2008 and 2009.
The government issued extensive guarantees to shore up the banking system. However, as in the crisis in the 1990s, Handelsbanken
did not need to use any state guarantees.
Today Handelsbanken is a universal bank with a comprehensive
range of financial services for private and corporate customers, including investment banking, financing and life insurance. Handelsbanken has a total of some 700 branches, of which 460 in Sweden.
In all, Handelsbanken is active in approximately 20 countries.
At year-end 2009 Industrivärden’s shareholding in Handelsbanken corresponded to 10.1 percent of the capital and 10.3 percent
of the votes, and is the largest holding in the equities portfolio in
terms of value. Industrivärden is Handelsbanken’s second largest
shareholder both in terms of its share of the capital and votes
Press release from November 24, 2009, announcing
Handelsbanken’s award as Bank of the Year.
Handelsbanken survived the financial crisis in 2008 and
2009 without a new issue or receiving government support, and maintained its high ratings.
166
Sandvik
The company Högbo Stål och Jernwerks ab was established in
1862 in Sandviken by Göran Fredrik Göransson, who was first in
the world to succeed in using the Bessemer method to manufacture steel on an industrial scale. The company was restarted in 1868
under the name Sandvikens Jernverk ab, and in 1972 its name was
changed to Sandvik ab. Operations were focused at an early stage
on high quality and further processing, investment in research and
development, close customer contact and exports. This successful
strategy has remained unchanged over the years. Sandvik was introduced on the Stockholm Stock Exchange in 1901.
As early as the 1860s, the product range included drill steel
for rock drilling. Sandvik began making stainless steel in 1921, and
cemented carbide in 1942 under the name Coromant. In the 1950s
cemented carbide began to be used for metalworking, and manufacturing of cemented carbide tools was begun. Several factories were
established abroad during the 1950s and ’60s. Sandvik’s foreign establishment has continued steadily in pace with the emergence of new
markets, and today the company is active in all five parts of the world.
The Göransson family’s role as dominant owner was taken over
in 1958 by Kinnevik. Skanska became a new, major owner after
Kinnevik in 1983.
Extensive investment activities were carried out during the
1960s and included the addition of new tube mills, press mills, coldrolling mills, electric arc furnaces and hardening plants.
In the 1970s Sandvik bought a majority of the shares in Seco
Sandvik 2000–2009
100 000
15 000
80 000
11 000
60 000
7 000
40 000
3 000
20 000
-1 000
0
-5 000
00
01
02
03
Total income, SEK M
167
04
05
06
07
08
Operating income, SEK M
09
Göran Fredrik Göransson, founder
of Sandvik.
A cemented carbide drill bit from Sandvik
Tooling.
Tools. Company acquisitions continued into the 1990s with the
acquisitions of – among other companies – Bahco Verktyg, Kanthal
(a maker of metallic and ceramic resistance materials), the Finnish
company Tamrock (a maker of rock drills), and the American high
speed steel manufacturer Precision Twist Drill.
A decentralized organization with a parent company, separate
business areas, regional companies and service companies was
adopted in 1984. The Saws and Tools business area was sold in 1999,
and operations were concentrated on Tooling, Mining and Construction, and Materials Technology.
In 1997 Industrivärden took Skanska’s place to become Sandvik’s
dominant owner.
Company acquisitions continued in the 2000s and included
the Austrian drilling equipment manufacturer Böhler, the German
toolmaker Walter, the American tool company Valenite, and the
Finnish powder metallurgy company Metso Powdermet.
Today Sandvik is a global high-technology engineering group
that conducts business in 130 countries. The Group works in three
business areas in which Sandvik has world leading positions. Tooling specializes in cemented carbide tools and high-speed steel for
metal cutting. Mining and Construction specializes in machines
and tools for the mining and construction industries. Materials
Technology manufactures high value-added steel products based on
advanced metals and ceramic materials.
Sandvik’s business concept is to actively contribute to improvements in its customers’ productivity and profitability. The company’s
products and services are designed to create value-added for customers in terms of performance, quality and cost effectiveness. Customers
should perceive Sandvik as a productivity partner. Sandvik’s strategy
is based on five strength factors, which together form a foundation
for profitable growth: global leadership, goal-oriented r&d, niche
focus, partnership with customers and strong brands. Sandvik has a
strong local presence, its own sales organization and close cooperation with customers, selected agents and distributors. Manufacturing
is conducted mainly under own management to ensure the highest possible quality, flexibility and cost effectiveness. The company’s
global presence provides economies of scale in production and
distribution, while also creating synergies in r&d, administration and
logistics. Sandvik is a global company, but works as a local partner.
168
An automated dumper with
equipment from Sandvik Mining
and Construction.
Industrivärden’s shareholding in Sandvik at year-end 2009 corresponded to 11.4 percent of the capital and votes, making it the second
largest holding in the equities portfolio in terms of value. Industri­
värden is Sandvik’s largest owner in terms of both votes and capital.
SCA
The most constructive industrial venture conducted by Ivar Kreuger
apart from matches was the creation of Svenska Cellulosabolaget
(sca).
At its start, the forest industry in Sweden’s Norrland province
was based on the immense value of forests and hydro power, but it
had a highly fragmented company culture and weak profitability.
Combining these operations together in a group in parallel with
efficiency improvement measures, new investment and a joint sales
organization could create significant coordination gains of an industrial as well as financial character.
Svenska Handelsbanken was the major bank in Norrland and
had substantial ownership interests in the Norrland forest industry.
During hard times the bank had seized shares in distressed companies to protect its loans. In early summer 1929, Ivar Kreuger put the
question to the bank’s president, Helmer Stén, if the bank would be
interested in selling its interests in the forest industry. In August, Handelsbanken sold its interests in a number of forest companies in Norr­
land to Kreuger & Toll for sek 40 million. The shares were transferred
to the newly formed company Svenska Cellulosabolaget, to which were
169
Stock certificates from the forest companies in Sweden’s Norrland province that
were merged to form Svenska Cellulosabolaget in 1929.
also transferred the shares in Skönviks ab and Kramfors ab, as well as
the two power companies Hammarforsen and Sikfors. Altogether the
stock purchases amounted to sek 130 million. Upon its formation, the
sca group accounted for roughly 20 percent of Sweden’s total production of pulp and sawn timber products.
Industrivärden made its first purchase of stock in sca in 1950 in
connection with a transfer of subordinated debentures in BolinderMunktell to Handelsbanken, which paid for these with sca shares
corresponding to 10 percent of the capital stock.
Hammarforsens Kraft, which had been broken off from sca in
connection with Industrivärden’s formation in 1943, was 97 percent–owned by Industrivärden following complementary purchases.
In 1963 sca sought to combine its subsidiary Bålforsens Kraft with
Hammarforsen. Payment was made in the form of newly issued
shares in sca along with cash and subordinated debentures issued
by Bålforsen.
In 1965 Industrivärden sold its entire shareholding in Bergvik
och Ala to Investor in connection with sca’s purchase of all of the
shares in Wifstavarf. sca paid for Wifstavarf using newly issued
Class b shares, a promissory note, and cash. Investor, which was the
principal shareholder of Wifstavarf, received shares in Bergvik och
Ala in exchange for newly issued shares in sca.
The rationale for this deal was that sca would obtain substantial
integration benefits through the acquisition of Wifstavarf, whose
plants in the Sundsvall area and forest assets in the Västernorrland
and Jämtland counties were adjacent to sca’s.
In 1974 sca was still a distinct forest company. Its major diversification took place in connection with the acquisition of Mölnlycke
in 1975. The background to this deal was that sca had transferred
its hygiene products business to Mölnlycke in 1973 as payment for
newly issued shares. Mölnlycke had great expansion opportunities,
and sca wanted to broaden its operations through further processing of its forest products. It was therefore natural to combine
the companies. In 1988 sca acquired the French hygiene products
company Peaudouce.
Hygiene products and tissue today account for 50 percent of
sca’s sales.
sca’s packaging business was complemented through acquisition of the Italian company Italcarta in 1988. During the same year,
170
sca acquired the Austrian company Laakirchen, a market leader in
supercalendered publication papers.
The British company Reedpack, which was acquired in 1990,
added substantial volume of transport packaging, a large recycled
paper operation and production of unbleached paper and newsprint.
The power company Bålforsen was divested in the early 1990s to
reduce the company’s debt.
In 1995 sca became Europe’s leading hygiene products company
through its acquisition of the German company pwa.
In 1999, sca’s and Holmen’s fine paper operations were combined to form the jointly owned company MoDo Paper, which was
sold in 2000 to Mätsä-Serla.
sca made its breakthrough in the North American market in
2001 through the acquisition of the American company GeorgiaPacific’s tissue operation. In 2004, large tissue companies were
acquired in New Zealand and Mexico. The North American packaging operation was divested in 2007. During that same year, sca
acquired Procter & Gamble’s European tissue operation.
Industrivärden’s shareholding in sca at year-end 2009 corresponded to 10.0 percent of the capital and 29.2 percent of the votes
and was the third largest holding in the equities portfolio in terms
of value. Industrivärden is sca’s largest shareholder in terms of both
capital and votes.
SCA 2000–2009
120 000
12 000
100 000
10 000
80 000
8 000
60 000
6 000
40 000
4 000
20 000
2 000
0
0
00
01
02
Net sales, SEK M
171
03
04
05
06
07
08
09
Profit after net financial items, SEK M
Toilet paper, diapers
and publication paper
are examples of prod­
ucts from SCA.
SSAB
ssab was formed in 1978 through the merger of Domnarvets
Jernverk in Borlänge, Norrbottens Järnverk (nja) in Luleå and
Oxelösunds Järnverk in Oxelösund. Since its inception, ssab has
successfully developed into one of the most profitable steel producers in the world, with a well-defined strategy focused on selected
niche segments within high-strength and quenched steels.
In the mid-1970s the steel industry in the West experienced a
severe structural crisis – the combination of substantial overcapacity, aged equipment and high labor costs was devastating. Competition from new manufacturing countries with modern equipment
and low production costs led to major losses. To make things worse,
capital was lacking for necessary investments.
As a result of a government study of the commercial steel industry, nja, Domnarvets Jernverk and Oxelösund were combined to
form a single company, Svenskt Stål ab (ssab), following a decision by Swedish parliament in 1977.
During the recession in the early 1980s, the world’s steel industry continued to suffer from overcapacity, causing profitability
problems for the entire industry. During ssab’s first year, a sweeping restructuring program was launched, and a total of more than
sek 3 billion was invested during the first years. Focus was on
efficiency improvement, and as a first step the ore-based production
at the Domnarvet steel mill was shut down, dramatically reducing
the number of employees.
ssab began to show a profit, but the return on capital was
unsatisfactory, and the need for continued restructuring in order to
improve profitability remained. A decision was made to invest in
steel sheet production at Domnarvet, and investments of more than
sek 1.5 billion were made in wide strip mills, cold rolling and cutto-length lines as part of the steel mill’s modernization.
The move toward becoming a strictly thin sheet producer with
a new product range and modern facilities would provide a stable
foundation for the future. Upon completion of the major investment in Strip Mill 82, an annual production rate of a million metric
tons had been reached.
The solution to Oxelösund’s profitability problems after its main
product, shipbuilding plate, virtually disappeared, was to invest in
industrial plate and high-strength quenched steels. However, profit-
172
SSAB’s Oxelösund rolling mill.
ability problems for the iron ore mines and long products such as
reinforcing bar and wire rod continued without reaching any solution. ssab strengthened its market positions by acquiring Tibnor.
A global economic upswing in the late 1980s led to rising demand
for steel and higher prices. Earnings and profitability improved for the
entire industry. To achieve balance in production and refine the product offering, ssab laid out a new structural plan. Operations would be
refined to cover production, further processing and sales of steel sheet
and heavy plate in the Steel Sheet and Oxelösund divisions. As part
of this plan, scrap-based steel production in Borlänge was shut down,
and Domnarvet became strictly a producer of steel sheet.
SSAB 2000–2009
60 000
12 000
50 000
9 000
40 000
6 000
30 000
3 000
20 000
0
10 000
-3 000
-6 000
0
00
01
02
Net sales, SEK M
173
03
04
05
06
07
08
09
Income after net financial items, SEK M
A coil box at SSAB’s hot rolling mill in
Borlänge.
Further reductions were made in the number of employees,
and profits improved. In summer 1989 ssab was introduced on the
stock exchange.
The economy turned downward in the early 1990s, and once
again the steel industry faced profitability problems. Sweden fell
into a deep recession, and ssab’s home market contracted. A larger
share of production was exported outside the Nordic countries
and the eu, which had a negative effect on profitability. Efficiency
improvement and cost-cutting activities continued.
ssab’s niche strategy grew increasingly clear: to be a specialized
steel company in commercial steel with focus on two main areas –
high-strength steel sheet and quenched, abrasion-resistant heavy
plate. Through efficient, modern plants, product development in cooperation with customers and focus on quality, service and delivery
reliability, ssab aimed to be the most profitable steel producer in
the world. During this period, the Swedish state sold its remaining
shareholding in ssab.
Industrivärden became a major owner of ssab in 1994 by purchasing 9 percent of the shares.
In the second half of the 1990s ssab carried out a major capex
program to boost capacity in its niche segments. Higher profitability enabled ssab to distribute capital to the shareholders through
redemptions and stock buybacks.
Strongly higher demand from China has characterized the
2000s thus far. Consolidation in the steel industry has increased,
and steel makers have gone over from being regional to global.
ssab Plate has attained a position as the world’s leading producer of quenched steels, and ssab Strip Products is one Europe’s
leading producers of high-strength steel sheet. With the acquisition
of ipsco in North America in 2007, ssab completed one of the
largest company acquisitions ever carried out in modern time in
Sweden. The acquisition has increased ssab’s competitiveness outside Europe, and the company can continue to develop its strategy
toward a higher share of niche products.
Industrivärden’s shareholding in ssab at year-end 2009 corresponded to 16.0 percent of the capital and 20.7 percent of the votes,
and was the fourth largest holding in the portfolio in terms of
value. Industrivärden is ssab’s largest shareholder in terms of both
capital and votes.
174
Ericsson
L M Ericsson was established through the 1918 merger between
two companies started by the pioneers of the Swedish telephone
industry: Lars-Magnus Ericsson and Henrik Tore Cedergren. The
company founded by Cedergren, Stockholms Allmänna Telefon
ab – which specialized in telephone traffic – was Ericsson’s second
largest shareholder after the merger, with 10 percent of the capital
stock. The company’s expansion in international markets required
substantial injections of financial resources. Contacts with the
financier Ivar Kreuger were thus a natural component in negotiations for telephone concessions in various countries. Ivar Kreuger
acquired stock in Ericsson by taking over Cedergren’s holding and
through purchases on the market. By year-end 1930 the Kreuger
concern owned 71 percent of the shares.
At the time of Kreuger’s death in 1932 the American company
itt owned a large shareholding in Ericsson and was given special
permission by the Swedish government to own up to 35 percent of
the shares. What followed was a long period of dissension within
Ericsson’s board. It was not until 1960 that itt agreed to sell its
shares in Ericsson.
Industrivärden’s shareholding in Ericsson upon its formation
in 1944 corresponded to 4 percent of the capital and 21 percent of
the votes, and was thus the second largest holding in the equities
portfolio in terms of value.
Ericsson 2000–2009
350
40
300
30
250
20
200
10
150
0
100
-10
50
-20
-30
0
00
01
02
03
Net sales, SEK billion
175
04
05
06
07
08
09
Income after net financial items, SEK billion
An Ericsson telephone
exchange, 1881.
Ericsson earned worldwide recognition for its advanced systems and products for fixed and mobile telecommunications. In the
mid-1990s its product range also included business communication
and defense systems and components. The fastest growing product
area, however, was mobile telecommunications, where Ericsson was
the world leader. Major investments were made in technological
development, and total technology expenditures amounted to more
than 20 percent of sales.
An Ericsson LTE terminal.
Ericsson’s technological development can be described by a number
of milestones:
• Throughout the entire 20th century, LM Ericsson worked in very
close contact with the former Swedish Telecommunications Administration. This collaboration gave birth to the axe telephone
exchange, which was a major sales success.
• The axe exchange was adapted to the nmt (Nordic Mobile
Telephone) mobile telephone system, which was developed in collaboration with the state telecommunications administrations in
the Nordic countries.
• The American Mobile Phone Standard (amps) was developed in
parallel with nmt.
• The second generation mobile telephone standard, gsm, became
the new standard for digital cellular mobile telephony. The axe
system was also adapted to gsm.
• The third generation mobile system, wcdma, is a further development of gsm.
• Ericsson’s concept for the fourth generation mobile system is
called lte (Long Term Evolution), which is paving the way for a
future, uniform global standard.
Ericsson’s market underwent dramatic changes around the turn of
the century. From the mid-1990s until 2000, the market experienced tremendous growth through the expansion of mobile infrastructure based on strong growth in the number of subscribers in
parallel with the expansion of fixed networks to handle the rampant
growth in Internet traffic. This culminated in 2000, but during the
three subsequent years, 2001–2003, the market for network equipment contracted considerably. Telecom companies were forced to
carry out drastic cost cutting as an adaptation to weak demand.
176
Ericsson was hurt by this drop in demand along with high development costs for the third generation of mobile systems and reported
combined operating losses of sek 65 billion from 2001 to 2003.
The number of employees was more than halved in order to adapt
operations to the changed conditions.
To secure the company’s success, a new issue was carried out
in 2002, which raised a net total of sek 29 billion for Ericsson. In
its capacity as a principal owner, Industrivärden issued a guarantee to subscribe for sek 3 billion in stock, of which sek 0.7 billion
corresponded to its existing shareholding. However, the issue was
fully subscribed, and the guarantee did not need to be used. Industrivärden subscribed for a total of sek 762 million in stock, including an extra allotment.
Since 2002 Ericsson has carried out a long line of company
acquisitions for a total of approximately sek 60 billion, mainly in
Internet-based communication. Among the companies acquired
are the British telecom company Marconi, the American router
company Redback, the Canadian telecom company Nortel’s mobile
operations, and the Norwegian iptv company Tandberg TV.
Today Ericsson is one of the few companies that can offer total
solutions for all major mobile communications standards. All of
the world’s ten leading telecom operators are Ericsson customers.
Ericsson is the world leader in second and third generation mobile
networks.
At year-end 2009 Industrivärden’s shareholding in Ericsson corresponded to 2.3 percent of the capital and 13.7 percent of the votes
and was the fifth largest holding in the equities portfolio in terms
of value. Industrivärden is Ericsson’s second largest owner in terms
of votes.
177
Prospectus for Ericsson’s new issue
in 2002.
Industrivärden’s largest owners
THEME
when industrivärden was established in 1944 the company
had preferred shares that corresponded to 1 percent of the capital
stock, but with 100 votes per preferred share, compared with one
vote per share of common stock. The preferred stock together thus
had equally large voting power as the sum of all the common stock.
All of the preferred stock was subscribed by board members and
executives of Handelsbanken. This arrangement was questioned by
the oversight authority at the time, the Bank Inspection Board, and
the preferred stock was redeemed in 1947. After this, Industrivärden
no longer had any dominant shareholder.
The first list of shareholders to be published showed the following five largest owners at year-end 1977:
Trygg-Hansa5.3%
Handelsbanken pension foundations
5.1%
Skandia5.0%
Förvaltnings ab Aeolus (owned by sca)4.2%
Promotion4.0%
Thus of the five largest owners, three were related parties to Handelsbanken (the pension foundations, sca/Aeolus and Promotion)
and two were insurance companies, whose ownership was maximized to 5 percent of the capital.
The first major owner outside of Handelsbanken’s inner circle
was Investment ab Beijer. At year-end 1983 the largest owners were:
Förvaltnings ab Aeolus (owned by sca)6.6%
Investment ab Beijer
6.5%
Handelsbanken pension foundations
5.7%
Trygg-Hansa5.6%
Skandia4.5%
178
Anders Wall represented Beijer on Industrivärden’s board from 1982 to 1989 (see interview with Anders Wall on page 193).
In the years that followed, Aeolus increased
its shareholding to 14.0 percent of the votes. In
other respects, the changes were marginal.
In 1988 Ratos bought a large block of shares
in Industrivärden after selling its stock in
Holmen and Iggesund. At year-end 1989 the
voting percentages were as follows:
Ratos20.5%
sca (through subsidiaries and related foundations)
17.9%
Beijer Industries
6.6%
Handelsbanken pension foundation and pension fund
7.7%
Bahco (formerly Promotion)
5.1%
Excerpts from a historical book on Ratos
from 1866 to 1991, describing Ratos’
investment in Industrivärden.
Sven Söderberg represented Ratos on Industrivärden’s board from 1989 to 1993.
After Beijer sold its shareholding,
Yggdrasil became the fourth largest owner in
1990. Erik Penser represented Yggdrasil on
Industrivärden’s board from 1990 to 1992
(see interview with Erik Penser on page 186).
After Yggdrasil sold its shareholding in
1991, the voting percentages were as follows:
sca21%
Ratos14%
Enskilda Fonder
7%
Bahco (formerly Promotion)
5%
aga5%
Carl-Erik Feinsilber and Marcus Storch represented Bahco and
aga, respectively, on Industrivärden’s board.
179
After Ratos sold its shareholding and Bahco was acquired by
Industrivärden, Sparbankernas Fonder entered the scene as a new,
major shareholder. At year-end 1993, the voting percentages were as
follows:
sca22%
S-E-Bankens Fonder
8%
Handelsbanken pension foundation and pension fund
8%
Sparbankernas Fonder
6%
aga5%
After S-E-Bankens Fonder and Sparbankernas
Fonder sold their shareholdings, the Fifth ap Fund,
Öresund and amf became new, major owners. At
year-end 1996, the voting percentages were as follows:
Dagens Industri, March 13, 1999:
“Öresund increases pressure on
Industrivärden.”
Finanstidningen, 1999: “SCA
does away with cross-ownership
with Industrivärden.”
sca13%
Handelsbanken pension foundation and pension fund
10%
Fifth Swedish National Pension Fund
7%
Öresund5%
amf4%
In 1997 sca issued five-year convertible debentures that could
be exchanged for Industrivärden shares. During the term of the
debentures, sca refrained from voting with its underlying
shares. In addition, the Fifth Swedish National Pension
Fund and Öresund sold their shareholdings. The Wallander & Hedelius foundation for scientific research
became a new, major shareholder, as did the Oktogonen
profit-sharing foundation. At year-end 2001 the voting
percentages were as follows:
Handelsbanken pension foundation and pension fund
16%
Wallander & Hedelius foundation
9%
Oktogonen5%
sca5%
sca convertible owners
4%
See interview with Sven Hagströmer on page 85.
180
Dagens Industri,
January 20,
2009: “Lundberg
ever-stronger in
SHB sphere.”
In 2002 and 2003, L E Lundbergföretagen emerged as a new, major
shareholder, and in 2007 Landå became a major shareholder. No
major ownership changes took place in the following years. At yearend 2009 the voting percentages were as follows:
Handelsbanken pension foundation and pension fund
19.7%
L E Lundbergföretagen
15.5%
sca (through related foundations)
15.3%
Wallander & Hedelius foundation
8.5%
Landå4.3%
Since 2004, L E Lundbergföretagen has been represented on Industrivärden’s board by Fredrik Lundberg. In Lundbergföretagen’s
2003 annual report, the rationale given for the purchase of a large
shareholding in Industrivärden was the need to obtain a spread of
risk outside of Lundbergföretagen’s traditional areas of focus, real
estate and forestry. See interview with Fredrik Lundberg on page
188.
181
Industrivärden’s reception rooms at Storgatan 10 in Stockholm are furnished with
furniture designed by Carl Westman and
Josef Frank.
182
INTERVIEW
Anders Wall
board member 1982–1989
What is the background to Beijer’s involvement in Industrivärden?
Beijerinvest’s cooperation with Handelsbanken began in connection with the acquisition of Pribo, a holding company that had a
minority stake in the Pripps brewery and owned a number of food
companies, such as Abba, Lithells, Ramlösa, and later Felix. In addition, Pribo had a large equities portfolio which included, among
other things, principal ownership of Husqvarna and Wirsbo Bruk.
The Pribo acquisition was very large for Beijerinvest at the time
and was financed by convertible debentures, which at the time were
a financial innovation. Through this deal, deeper cooperation was
established with Handelsbanken. A reciprocal owner relationship
was also established between Beijerinvest and Industrivärden.
I was on both Handelsbanken’s and Industrivärden’s boards for
several years. Industrivärden was represented on Beijerinvest’s board
by Tore Browaldh and subsequently on Argentus’s board by Jan
Wallander, Stig Ramel and ceo Per Lindberg.
Why was the shareholding sold?
The cooperation with Handelsbanken dissolved in connection with
the financial crisis in the early 1990s. The shareholding in Industri­
värden was sold, and a large portion of its was bought by Yggdrasil,
whose involvement was short-term, however.
What is your view about Indus Innovation, which was created
in 1984 to provide venture capital to small, technology-oriented
companies?
My experience with upstart companies is that they require a great
deal of work, but as a rule do not generate such a great return. A
large holding company like Industrivärden is not a suitable owner
for such companies, and sure enough, Indus Innovation was sold
after a few years.
183
Industrivärden was the second largest
owner of Beijerinvest and Argentus,
which was broken up in 1988 to form
Beijer Industries and Beijer Capital. At the
same time, Beijer was Industrivärden’s
third largest owner. Anders Wall repre­
sented Beijer on Industrivärden’s board
from 1982 to 1989.
Today Anders Wall is Chairman of the
Board of Beijer Alma, Beijerinvest and the
Anders Wall foundations, among others.
DACKE
In 1986 Industrivärden acquired a large shareholding in Nils Dacke
from Volvo. At the time the Dacke group consisted of some thirty
companies, mainly in southern Sweden. What do you know about
the background to the formation of Nils Dacke?
I was highly involved in the formation of Nils Dacke. I had been
asked to give a presentation for a marketing association in Växjö,
based on my experience from various investment companies. The
idea was hatched to start a local investment company, and an
improvised list was circulated during the meeting. The company
that was formed was given the name ab Nils Dacke to highlight
the local ties to the entrepreneurial spirit in Sweden’s Småland
region. Nils Dacke became a subsidiary of Beijerinvest’s associated
company Sonessons, and its first ceo was Sven Ohlsson. The first
acquisition was made in 1978 of the industrial trading company
Bengtssons Maskin, with Gunnar Tindberg as president. With
Bengtssons Maskin as a platform, Dacke Handel was built up,
which became the foundation for Indutrade, which was introduced
on the stock market by Industrivärden in 2005. Another early acquisition by Nils Dacke was the car roof carrier maker Thule.
Nils Dacke also grew by acquiring industrial companies like
Karner, a maker of clothes hangers, Mont Blanc, which makes
cargo carriers for cars, Maskin ab Rapid, which makes granulators
for grinding plastic waste, and a number of hydraulics companies.
Through an unfortunate set of circumstances, Industrivärden
became a major owner of Fermenta in 1986. What can you tell us
about the discussions in Industrivärden’s board regarding all of the
rounds in the Fermenta affair?
There were many long meetings of Industrivärden’s board surrounding the unfortunate acquisition of a large block of shares in
Fermenta. My general view is that it is incomprehensible how there
could be such hysteria surrounding this company and its former
principal owner, Refaat El-Sayed. Nevertheless, there was great
interest in pharmaceutical and med-tech stocks at the time. Plus,
Industrivärden had a large shareholding in another pharmaceutical
company at the time – Astra.
The shareholding in JM was sold to Skanska in 1987 in exchange
for Skanska stock. What do you remember about the board’s rea-
184
soning for Industrivärden to become a large owner of Skanska?
The building contractor John Mattsson had sold his company jm to
Industrivärden as early as 1965, and the company was listed on the
stock exchange in 1982, but Industrivärden kept a stock majority.
Selling the jm shares to Skanska in exchange for an issue in kind of
Skanska stock was a way of gaining ownership in a larger and more
international construction company than jm. And of course, Industrivärden has subsequently bought more shares in Skanska.
plm became a wholly owned subsidiary after Industrivärden made
a bid for the outstanding shares in 1987, financed by the issuance of
cpn’s. What do you recall about the board’s reasoning?
Argentus was interested in acquiring plm through an issue in kind,
which would have increased Industrivärden’s ownership of Argentus. But from Handelsbanken’s perspective, the preference was for
plm to become a wholly owned subsidiary of Industrivärden.
plm’s board acted very independently from Industrivärden.
When plm was to be introduced on the stock market after a few
years, major changes were also made in plm’s board, and the Laurin
era at plm thus came to an end.
Industrivärden was a distinctly mixed holding company with a
large, wholly owned industrial and trading operation during your
time on the board. Today it is a pure holding company with ten
large holdings in listed companies. What is your comment?
I clearly prefer the mixed holding company format, where you gain
access to the cash flow of the wholly owned subsidiaries. Granted, a
pure holding company is quite easy to analyze, but cash flow can be
a problem.
What is your most noteworthy experience from your many years in
business?
It was when Beijerinvest and Volvo merged in the early 1980s. I
served as chairman of the board but then left after a few years. My
experience is that mergers should not be left entirely up to “pencil
pushers” – what’s most important is that the business cultures and
people can work together!
185
INTERVIEW
Erik Penser
board member 1990–1992
Through your wholly owned company Yggdrasil, you were
Industrivärden’s fourth largest owner in 1990 and 1991. Tell us
about the background to Yggdrasil’s purchase of a large share­
holding in Industrivärden in 1990, which your company was
then forced to sell in 1991.
Erik Penser is currently Chairman
of Yggdrasil, among other things.
Beijerinvest’s shareholding in Industrivärden was for sale, and I
gladly accepted an offer to let Yggdrasil buy a large block of shares.
The investment was of a long-term character, but when the finance
company Gamlestaden crashed during the financial crisis in the
early 1990s, Nordea took over the shares in Yggdrasil. Nordea
then sold Yggdrasil’s shareholdings, including the shares in Industrivärden, which thereby unintentionally turned out to be a shortterm investment.
Was your investment originally intended to be long-term even
though the circumstances led to a sale after only a couple of years?
The purchase of the Industrivärden shares was absolutely a longterm investment for Yggdrasil. Industrivärden was a strong owner
that took great responsibility for its shareholdings. I believe that
voting rights differences, which exist in many of Industrivärden’s
holdings, are of great positive value for a long-term owner. Strong,
long-term owners provide a stable work environment for the companies they own.
How involved were you in the various large transactions during
your time on Industrivärden’s board, such as the acquisition of
purchase rights in ssab and the bid for Bahco?
I was highly involved in the ssab deal and supported Industrivärden’s decision to become a major owner of ssab. The acquisition of Bahco was handled exceptionally well by Industrivärden’s
ceo, Carl-Erik Feinsilber, and I had a positive view of the deal
without having a more in-depth involvement in the matter.
186
In 1991 Industrivärden was a mixed holding company, with nearly
half of its assets in wholly owned subsidiaries such as plm, Bahco,
Dacke, Indutrade and Fundament. Today all of the wholly owned
businesses have been divested, and Industrivärden is a pure holding company with substantial shareholdings in ten listed companies. As an investor, do you prefer an easily analyzed, pure holding
company over a mixed holding company?
What’s important is that the shareholdings represent strong and
profitable companies, regardless of whether the companies are listed
or not.
Would you recommend an investment in Industrivärden today?
A long-term investment in Industrivärden, whose equities portfolio represents some of Sweden’s best industrial companies, can’t be
wrong.
How did cooperation work in Industrivärden’s board during the
time you served as a board member?
I have always had the greatest confidence in Bo Rydin and Tom
Hedelius, who I was also in contact with on sca’s board. Carl-Erik
Feinsilber was a clever and competent ceo – his proposals were
well thought out.
187
INTERVIEW
Fredrik Lundberg
board member since 2004
L E Lundbergföretagen began building up a shareholding in
Industrivärden in 2002 by acquiring a 6.1 percent voting stake. By
2003 L E Lundbergföretagen was Industrivärden’s single largest
owner, with 10.7 percent of the votes. At year-end 2009 the holding
corresponded to 15.5 percent of the votes. On top of this, you also
have a large personal shareholding. What do you see as the foremost strengths of Industrivärden and its portfolio companies if you
were to summarize them in a few points?
Fredrik Lundberg is Chairman of
the Board of Cardo, Holmen and
Hufvudstaden, Vice Chairman of
Handelsbanken and NCC, and
President and CEO of L E Lundbergföretagen, among other
things.
Industrivärden is the sum of its portfolio companies. Its foremost
strength is that the holdings represent quality companies with
strong positions in their respective industries and talented employees. In addition, Industrivärden has built up an extensive and valuable contact network and has competent management.
Over the last 25 years Industrivärden has had a number of different major owners which have sold their entire holdings after a few
years – companies like Beijer, Ratos, Yggdrasil, Enskilda Fonder,
Sparbankernas Fonder, Öresund, and various Swedish National
Pension Funds. What horizon do you see for Lundberg’s shareholding in Industrivärden?
All of Lundberg’s investments are long term. We have no exit
strategy for Industrivärden. What’s decisive is how well the portfolio companies develop. We will most likely be a major owner of
Industrivärden even after 10 and 20 years.
Lundbergs and even you personally have made large purchases of
stock in several of Industrivärden’s portfolio companies, such as
Handelsbanken and Sandvik. What is the thought behind having
both direct and indirect shareholdings in these companies?
The same investment strategy used by Lundbergs applies for me personally and my two daughters – we have all made substantial purchases of stock in Industrivärden and several of its portfolio companies.
188
Dagens Industri, February 19,
2004: “Fredrik Lundberg in new
power alliance.”
The so-called Handelsbanken sphere – through various foundations and related parties to Handelsbanken and sca – today holds
slightly more than 50 percent of the votes in Industrivärden. For
the past few years, Industrivärden and Lundbergs have had representatives on each other’s boards. How does the cooperation work
between Lundbergs and the Handelsbanken sphere?
I became a member of Handelsbanken’s board already before Lundbergs began buying stock in Industrivärden. Tom Hedelius has been
a member of Lundbergs’ board since 2004. We have a very strong,
shared view regarding ownership and long-termism.
The cooperation has worked well in both Handelsbanken’s and
Sandvik’s boards, which is illustrated by the fact that Lundbergs
has made considerable, complementary purchases of stock in these
companies.
In connection with Indutrade’s stock market introduction,
Lundbergs bought 10 percent of the shares and is also represented
on Indutrade’s board, which is a further example of the cooperation
between Lundbergs and Handelsbanken.
189
What advantages and disadvantages do you see for Industri­
värden’s portfolio companies in having a stable, long-term owner?
The biggest advantage of long-term ownership is stability. Investments and various ventures can be made regardless of short-term
market variations. Having a sustainable strategy enables long-term
investment.
At the same time, having a long-term perspective puts strong
demands on the owner. The requirements for good profitability and
effective management are at least as high as for short-term ownership. A long-term perspective thus puts great demands on the
owner, which must manage its ownership well.
Lundbergs is today a large owner of listed Swedish companies, not
only in the original real estate and construction sector, but also in
the banking, forest and engineering sectors. Are there any industries that Lundbergs is entirely uninterested in?
Our equity investments are focused on industries that we are familiar with and understand – preferably with strong entry barriers in
the form of requirements for know-how or substantial capital.
Lundbergs has therefore avoided telecoms, pharmaceutical
companies and consulting companies that are entirely dependent
on their employees’ knowledge. Our focus today is on real estate,
the forest industry, engineering, and finance.
The cover of Lundbergs’ anniversary book
features the Hovslagargatan 5 building in
Stockholm, which Lundbergs owns and
has its head offices in.
Like Industrivärden, L E Lundbergföretagen was established in
1944. Originally it was strictly a construction company and did
not start investing in listed stocks until the end of the 1970s. What
similarities and differences do you see between Industrivärden and
L E Lundbergföretagen as a large owner of listed companies?
The difference is that Lundbergs has a wholly owned property business
and two listed subsidiaries. In other respects, the operations consist of
partly owned listed companies, as is the case for Industri­värden.
190
Excerpt from L E
Lundbergföretagen’s
2008 Annual Report,
describing the company
in brief.
Lundbergs’ property business is easy to valuate, since it is made
up of a number of large properties that can be assessed individually. The listed holdings always have a given stock market value. In
summary, Lundbergs is therefore almost as transparent and easily
valued as Industrivärden, with it ten shareholdings in listed companies.
What is Lundbergs’ long-term ambition in Swedish industry?
Lundbergs has a long-term perspective in its investments. What’s
important is that the companies generate value added through
favorable industrial development, which is the foundation for value
growth and higher dividends.
The primary concern for Lundbergs as an owner is to manage
its ownership role and contribute to the favorable development
of the portfolio companies. Management issues are important, so
­appointing a company’s ceo is paramount.
191
Industrivärden’s business model
THEME
Long-term structured value creation
Industrivärden’s core business is to invest in listed Nordic companies with good potential for value appreciation, and through
active ownership to contribute to continuous growth in value of its
portfolio companies. The role as active owner requires that Industrivärden can wield significant influence and entails a long-term
investment horizon. An active ownership perspective also fosters a
good understanding of the portfolio companies’ businesses, operating environments and continuing development. Contributing
to value creation in the portfolio companies increases asset values
while reducing Industrivärden’s equities risk.
Work is conducted in a structured manner within the framework of three main processes: investments, active ownership and
exit evaluation. The market operations support process aims to
support the main processes with market information, to maintain
a contact network, and to generate excess returns. Most of Industrivärden’s resources are geared towards the work of creating value
through active ownership. Built-up value is realized in connection
with divestments and reallocations within the equities portfolio.
Competitive platform
Industrivärden has made a concerted effort to establish a highquality platform for long-term value creation. This is based on
strong financial resources, a long-term investment perspective and
a highly refined model for continuously evaluating existing and
potential investments. At the core of this business are a structured
process for exercising active ownership, experienced directors with
ties to Industrivärden on the boards of the portfolio companies, and
a professional investment organization that continuously analyzes
and evaluates the performance of the portfolio companies. Analyses are presented on a continuous basis to Industrivärden’s board.
The work is project-oriented and involves personnel from both the
192
Dagens Industri,
November 13, 2007:
“Industrivärden shows
that long-term perspective works.”
investment organization and staff functions. The business processes
are supported by first-rate work methods and information systems.
Professional organization
Industrivärden has the internal and external resources needed to
conduct a professional investment operation and maintain highquality active ownership. At the same time, Industrivärden has
a lean organization that is distinguished by flexibility and short
decision-making channels. In all, Industrivärden has just over 20
employees. Active ownership is exercised mainly by representatives
with ties to Industrivärden on the boards of the portfolio companies. Added to this is a valuable contact network with Nordic ties.
Clear investment criteria
Adhering to the business mission of creating shareholder value
based on a professional investment operation and active ownership, Industrivärden works according to the following investment
criteria:
• Investments in mid- and large cap listed Nordic companies
• Focus on business models that can be applied in several
markets and with a good ability to generate growth in
cash flow
• Major potential for value appreciation through active
ownership
• Ownership interests that enable significant influence
• Concentration on a limited number of holdings
193
Every investment is analyzed with respect to its potential for value
appreciation in relation to individual return requirements. Quantitative goals are evaluated on a continuous basis, as are possible
forms of a future exit. Major emphasis is put on making continuous comparisons against long-term investments in other listed
companies. Investments are made within the framework of Industrivärden’s overall portfolio strategy, they are not dependent on any
particular sector, and they are evaluated continuously with a 5–8
year time horizon.
Evaluation of investments
The investment process has two main purposes – to evaluate existing investments against set target values and alternative investment
candidates, and to provide a continuous and up-to-date picture of
attractive new investment candidates in the aim of quickly being
able to act when business opportunities arise. Through a systematic
work process, well-grounded decisions can be made with a high
degree of efficiency and low cost.
Based on Industrivärden’s investment criteria and investment
horizon, the equities portfolio consists of the listed Nordic companies that are judged to have the greatest potential for value creation
INDUSTRIVÄRDEN’S STRENGTHS
High-quality portfolio of leading
companies
Value-creating long-term active
ownership
• Professional buildup and selection process
• Industry-leading companies with proven business
models and promising future prospects
• Unique portfolio strategy
• Continuous active development of companies
• Long-term focus increases value-creating potential
Strong leverage of influence
Substantial structural capital
• Significant influence in global companies with
combined market cap of approximately SEK 750 billion
• Collaboration with other owners
• Strong positions of trust
• Professional organization
• Experienced board members
• Well-tested and effective work methods
• Extensive networks
194
through active ownership in 5–8 years’ time. A key activity in the
investment process is thus to continuously evaluate the existing
holdings against set targets and alternative holdings. A decision to
hold or increase ownership in a portfolio company is equally important as a decision to decrease the position or sell. Thus if Industrivärden succeeds over time at optimizing the value of its portfolio
companies and continues to be successful in its active ownership,
the turnover rate in the portfolio will be relatively low.
This ongoing analysis of potential new investment candidates is
based on the more than 800 companies that are listed on the Nordic stock markets. The 50 or so most interesting listed companies
are monitored on a regular basis. The companies in Industrivärden’s
portfolio are analyzed in parallel with and on the same premises as
the most interesting potential new investment candidates. Following information-gathering, external contacts, analysis and prioritization, presentations of the most interesting companies are made
to Industrivärden’s investment committee, which is made up of the
executive management team and representatives of the investment
operation. Any decisions are made thereafter on whether to proceed
with a more in-depth analysis and to form an investment team for
further consideration. One of the duties of this team is to draw up a
preliminary action plan outlining how Industrivärden would be able
to actively contribute to value creation in the company. Such a plan
also covers goals and forms of future exit. Following this in-depth
analysis, if the investment candidate is still judged to be interesting,
the forms of stock purchases are established – following a decision
by the Board – and an ownership position is gradually built up in
the company. The investment team monitors the company during
the entire time it is included in Industrivärden’s portfolio.
Market operations and short-term trading
Industrivärden has a separate function that conducts various market
operations in the aim of supporting the investment activities. This
function executes investment decisions and provides daily market
information. In an effort to generate excess returns, short-term
trading is also conducted in equities and equity-related instruments.
Value is created primarily through option transactions in the shares
of existing portfolio companies.
195
Investment team at work.
ACTIVE OWNERSHIP
Portfolio companies
Ownership issues
Resources
■ Strategic and business
development
■ Directors on the boards
of portfolio companies
who have ties with
Industrivärden
■ E xecutive management
■ Company structure
■ Financial targets
■ Capital structure
■ Investments and
acquisitions
■ Investment organization
■ Proprietary methods and
systems
■ E xtensive networks
■ Recommendations for
board members
■ Participation at general
shareholder meetings
■ Board work
■ Action plans
■ Corporate governance
issues
■ Continuing dialog and
company visits
■ Organizational
structure
■ Compensation
structures
■ Reporting and control
systems
■ CSR and environmental
issues
Perspective and
owner agenda
■ Guidelines for active ownership
■ Action plan for value creation
■ Collaboration
Other major shareholders
of the portfolio company
Active ownership
Industrivärden’s influence in its portfolio companies emanates from
significant ownership interests and a strong position of trust. From
this foundation, an active ownership role is exercised through interaction with other major owners in the aim of finding ways to build
value in the shareholdings. Active ownership is exercised by the
directors on the boards of the portfolio companies who have ties to
Industrivärden, through participation on the respective companies’
nominating committees, and through direct dialog between Industrivärden’s investment organization and leading representatives of
the portfolio companies. At least one director with ties to Industrivärden should sit on the board of a portfolio company. Normally
the preference is for Industrivärden to have the role as chairman of
the board as well as chairman of the nominating committee.
Once Industrivärden has taken an active ownership role in a
new portfolio company, the previously drafted action plan for value
196
creation takes on a more concrete design. From having been a
decision-making document in the investment process, it now forms
the foundation for the design, implementation and evaluation of
Industrivärden’s active ownership. The chief aim is to identify and
describe various opportunities for value appreciation and strategic actions for creating this value. The team that is responsible for a
particular holding monitors and updates the action plan on a continuous basis. This work is conducted according to a structured work
method and consists of – among other things – continuous analysis
of the portfolio company’s business, competitors and other central
factors in the external environment, as well as company valuations.
All analysis is based on external information material. Information is
obtained with the help of suitable system support, through company
visits, through ongoing dialog with the management of the respective
companies and through contacts with the companies’ customers and
other stakeholders. As help in this work, Industrivärden makes use
of an extensive network. Industrivärden’s ambition is to be the owner
that has the most qualified picture of its portfolio companies, their
competitors, and the environment they work in.
Each investment team presents its action plan to the director or
directors with ties to Industrivärden serving on the boards of the
portfolio companies. In this way, Industrivärden’s representatives
are provided with a current picture of identified opportunities and
measures.
By working with sound, well-researched ideas, Industrivärden
can exert influence on the respective portfolio companies’ boards. In
this way, over time parts of the action plans can be put to concrete
work in the portfolio companies for future value creation.
Exit evaluation
Exit evaluation aims to optimize the realization of built-up value. It
is important at an early stage to evaluate value growth targets and the
forms of a conceivable future exit in step with the practice of active
ownership. The action plan prepared during the new-investment process includes goals and options for a future exit, among other things.
Through close interaction between the three main processes, plans
and ways of working can be quickly adapted to new knowledge or
changed conditions in the external business environment.
197
Industrivärden exercises active ownership
through an arrangement in which most of
its board members are also members of its
portfolio companies’ boards.
Refinement from mixed to
pure holding company
THEME
Company
Share of
capital, %
Share of
votes, %
Fagersta
50.0
53.4
4.2
21.1
Bergvik och Ala
38.4
38.4
Hammarforsen
66.4
66.4
Almedahl-Dahlsjöfors
21.4
21.4
Kilsund
66.7
66.7
Regia
36.6
36.6
L M Ericsson
Industrivärden’s equities portfolio, 1945.
holding companies are commonly categorized as either mixed
or pure. By pure holding company is meant that the assets consist only of stocks in listed companies. Such a holding company
is thereby entirely transparent and easy to value. A mixed holding
company, on the other hand, includes a certain portion of its assets
in subsidiaries or other unlisted holdings and is thus harder to valuate.
Through their cash flow, wholly owned subsidiaries can help
finance dividends paid out by the holding company, which is
thereby not entirely dependent on dividends received from its listed
portfolio companies. Wholly owned subsidiaries put demands on
the holding company in the form of an organization for business
follow-up and consolidated accounting, while “ordinary” shareholdings put demands on in-depth company analysis by the holding
company.
At the time of its stock market introduction in 1945, Industrivärden was a mixed holding company, with the steel company
Fagersta, the power company Hammarforsen, and the textile company Kilsund as subsidiaries. In addition, Industrivärden had sizable
minority interests in the engineering company L M Ericsson, the
forest company Bergvik och Ala, the textile company AlmedahlDahlsjöfors, and an indirect interest in the phosphate company
Reymersholm.
During the 1950s, the cement manufacturer Gullhögen was
brought into the portfolio as a subsidiary, while the holding in Fagersta was decreased so that it was no longer a subsidiary.
The construction company jm and the building supplies company Olsson & Rosenlund became wholly owned subsidiaries during
the 1960s, while Hammarforsen and Bergvik och Ala were sold in
connection with various structural deals.
198
In the 1970s, Fagersta and the cement manufacturing unit of
Gullhögen were sold. Gullfiber’s insulation material manufacturing
business was kept until the end of the 1980s.
In the 1980s, jm was introduced on the stock market, and Olsson & Rosenlund was sold, while the engineering companies Nils
Dacke and plm became new subsidiaries. The property company
Fundament was founded in 1981. The holding Bahco, with 12 wholly
owned subsidiaries – mainly engineering companies – was acquired
in 1991 and merged with Dacke in 1992, forming Inductus. Prior
to this, the industrial trading company Indutrade had been broken
away from Nils Dacke.
In the early 1990s, Industrivärden was thus a distinctly mixed
holding company, with half of its assets in wholly owned engineering and property companies. Organizationally, Industrivärden
consisted of its portfolio of listed stocks, plm, Inductus, Indutrade
and Fundament.
Since most of the engineering companies in Inductus had been
sold from 1991 to 1993, and plm was divested in three steps from
1995 to 1998, Industrivärden was faced with the choice of continuing its concentration process of becoming a pure holding company or once again acquiring wholly owned businesses. Following
strategic discussions by the board in 1996, a decision in principle
was made to concentrate the operations, but to remain open to the
opportunity for individual acquisitions of wholly owned companies.
During the 2000s, the onset of globalization and stronger competition for capital led to demands for a focusing of the business
concept for all holding companies. A strategic decision made in
2002 entailed, as main points, that the equities portfolio would be
transparent and concentrated, consisting mainly of mid- and large
cap listed Nordic companies, that as an active owner, Industrivärden
would participate in the portfolio companies development, and that
the investment operation would build up a structured process of
continuous analysis of existing and potential holdings.
Industrivärden’s concentration process toward becoming a
pure holding company continued until 2006, when the last wholly
owned subsidiary was sold. Industrivärden has thus been a pure
holding company since 2007, for the first time since the company’s
founding.
199
Company
Share of
capital, %
Share of
votes, %
Handelsbanken
10.1
10.3
Sandvik
11.4
11.4
SCA
10.0
29.2
SSAB
16.0
20.7
13.7
Ericsson
2.3
Volvo
3.3
8.5
Skanska
6.9
27.3
36.9
Indutrade
36.9
Höganäs
10.1
8.1
Munters
14.6
14.6
Industrivärden’s equities portfolio, 2009.
Tax rules for holding companies during
various periods of time
THEME
Industrivärden-domarna-en analys
av Anders Hultqvist
1 Bakgrund
Det var många som med spänning väntade
på Regeringsrättens domar i Industrivärdenmålet. När de så kom den 6 november gav
de upphov till starka reaktioner (dock utan
jämförelse med vad som hände samma dag
1632). Under julhelgen kunde vi läsa och
höra i alla media att bolagsskatten numera i
princip var frivillig för de svenska företagen.
Ett skattebortfall på 60 miljarder kronor var
att vänta. Andra, däribland jag själv, ansåg
att Regeringsrätten satt ned foten till stöd
för legalitetsprincipen och en rättssäker
rättstillämpling.
Vad är sant? Till att börja med fordras
mycket speciella omständigheter för att
en bolagsstruktur av typen Industrivärden
skall komma till stånd med de skatteeffekter som uppstod. För det andra är det
högst diskutabelt om det – ens vid en
revidering av lagstiftningen – är en fråga
om alltigenom icke önskvärda effekter som
uppstår vid denna typ av bolagsstrukturer.
Men det är en politisk fråga, som jag lämnar
därhän i fortsättningen. Slutligen: är det i
rättstillämpningen eller i lagstiftningen som
problemet ligger?
An analysis of Industrivärden’s tax ruling
from the tax journal Svensk Skattetidning,
No. 1, 2008.
This section has been reviewed by tax
lawyer Lars W. Hemmingsson, PricewaterhouseCoopers.
during industrivärden’s 65 years in existence, the tax rules governing stock ownership and sales have changed several times.
When Industrivärden was established in 1944, dividends received
were tax-exempt under the condition that a company was not professionally engaged in the business of buying and selling stocks. For
Industrivärden, with its distinctly long-term equities portfolio, profits
from sales of stocks were tax-exempt after a period of five years. In order
to conduct short-term trading, Industrivärden formed the subsidiary
Hindus, which conducted securities trading with varying success for
several years. Today short-term trading is conducted by the subsidiary
Nordinvest.
The holding company concept was codified in Swedish tax legislation in 1960. Since that time, a holding company has been defined as
a company whose purpose “is primarily – through a well distributed
holding of securities – to offer shareholders a spread of risk and whose
stock is owned by a large number of natural persons.” Holding companies were exempted from paying tax on dividends received if at least 80
percent were distributed to the holding company’s owners.
In 1966, “perpetual” capital gains taxation was introduced for stocks,
which in principle entailed that for stocks held for more than five years,
10 percent of the sales price would be subject to tax.
This rule was changed in 1976 so that profits from sales of stocks
held for a shorter period than two years would be taxed 100 percent,
while for longer ownership periods than two years, profits would be
taxed at a rate of 40 percent. This level was raised to 50 percent in 1990.
Since 1991 the rule is that profits from sales of stocks are tax-exempt, dividends received are taxable, and the company’s own dividend
paid out is tax-deductible. Interest income is taxable, while interest
expenses and management costs are tax deductible. The tax calculation
also includes a standard income assumption consisting originally of 2
percent of the shareholdings’ market value at the start of the year. The
aim of the standard income assumption is to even out the positive effect
200
that arises from the fact that an indirect owner, such as a holding company, can reinvest its entire capital gain, while a direct owner can only
reinvest the share that remains after the capital gains tax has been paid.
Parallel with the sharp growth in the value of the equities portfolio
from 1998 to 2000, the standard income assumption rose to a corresponding degree. To minimize the parent company’s tax charge, the stock
dividend was therefore raised from sek 4.50 per share in 1998 to sek 8.35
per share in 2001, of which sek 3.35 consisted of a bonus dividend.
The standard income assumption was lowered in 2003 to 1.5 percent
of the market value of the equities portfolio at the start of the year as
an adaptation to the rules that apply for equity funds.
The capital gains tax on business-related shares was abolished on
July 1, 2003. This refers to unlisted stocks or market-listed stocks where
the holding accounts for at least 10 percent of the number of votes.
The rules for calculating the standard income assumption for holding
companies were adapted, so that business-related shares were no longer
included in the figures for calculating the standard income assumption. In addition, the standard income assumption is to be based on the
most recently acquired stocks if these, at the start of the tax year, were
held for a period of less than one year. Following these rule changes,
the standard income assumption is based only on a small portion of
Industrivärden’s equities portfolio, since the entirely dominant part of
the equities holdings are business-related.
For organizational reasons, from 1995 to 1998, several of Industrivärden’s subsidiaries were owned by holding companies that were
owned by and a few of which were later merged with Industrivärden.
The Swedish Tax Authority questioned Industrivärden’s right to deduct
the interest paid by the holding company and argued that this was
subject to the rules of the Tax Evasion Act. The County Administrative
Court turned down the Tax Authority’s request, but the Administrative
Court of Appeal upheld the request in a ruling in 2004. However, in
2007 the Supreme Administrative Court overruled the Administrative
Court of Appeal’s ruling, thereby allowing Industrivärden to dissolve a
provision of sek 165 million for the potential tax liability. In its ruling,
the Supreme Administrative Court said that the questioned loans had
been taken up before the Tax Evasion Act had taken force, and that
the circumstances in the case in all essential respects were in agreement
with a case that had been previously reviewed by the Supreme Administrative Court in which the Tax Evasion Act was not applicable.
Through adaptation to the rules that apply at any given time,
Industrivärden has, like other holding companies, been able to keep
its tax burden down. Industrivärden has always been able to keep its
actual tax costs low.
201
Affärsvärlden, September 8, 2004:
“Industrivärden takes advantage of new
tax rule.”
Industrivärden’s reporting to the
stock market
THEME
Minutes of board meetings from 1960
to 1962 have been preserved in a bound
book.
industrivärden’s reporting to the stock market reflects
the laws and rules which at any given time put demands on the
financial information that a listed company must publish and can
thereby be regarded as a historical record of events.
Upon its formation in 1944, Industrivärden was the parent company of a group with a voting majority in the steel company Fagersta, the power company Hammarforsen and the textile company
Kilsund. The company’s other shareholdings in the engineering
company L M Ericsson, the forest company Bergvik och Ala, the
textile company Aldedahl-Dahlsjöfors and the phosphate company Reymersholmen exceeded 20 percent of the number of votes
and would thus in today’s nomenclature be classified as associated
companies. The rules and regulations that apply today would have
required extensive reporting already in 1944, with presentations of
the portfolio companies’ operations and accompanying consolidated
accounting. However, in accordance with the legal requirements
that applied at the time, the first printed annual report, comprising
eight pages of quarto format, included only a summary administration report, income statement and balance sheet, a list of stocks
held and a proposed distribution of profit. Up until 1975, Industrivärden’s annual reports were prepared according to the principle
of “minimum requirement by law,” and thus gave shareholders little
information about the business they were actually part owners of.
The internal reporting was all that much more extensive. Bound
books covering the period 1944–1962 include not only very extensive minutes of board meetings which record discussions that were
conducted, but also highly detailed presentation memos. Thus all
information was on hand, but the stock market only received what
was most necessary. From 1963 until 1985, the minutes of every
board meeting were bound with a seal and stored in a file box. The
internal documentation was of a high standard, while the published
annual reports were barely informative.
202
Not until 1976, in connection with changes in the Companies
Act, did Industrivärden publish a more extensive annual report
with comments on the economic trend in general and the stock
market in particular, analyses of the equities portfolio, and
descriptions of the subsidiaries. In subsequent years the reporting was expanded to include a ceo’s message, Group overview
and increasingly more detailed descriptions of the portfolio
companies and subsidiaries. The first interim report, which
covered the first eight months of the year, was published in
1983.
Starting in 1986, Industrivärden’s reports provided a
description of how net asset value was calculated. In 1988
the description of the portfolio companies and subsidiaries
was further expanded upon. An in-depth analysis of net asset
value, under the heading “Industrivärden’s Value,” was published in
1989. Owing to this analysis, the 1989 annual report won an award.
A description of the Group, the stock market’s performance for the
year, Industrivärden’s stock, the portfolio companies and subsidiaries covered more than 30 pages in the 1990 annual report, whose
cover displayed a picture of the façade of the newly renovated
“golden building” at Storgatan 10 – which housed the new head
offices.
In the years that followed, the description of the portfolio
companies was expanded, with a spread devoted to each of the
largest companies. A section showing the medium-term portfolio
was added, as was a section describing environmental work by the
portfolio companies. The accounting section was expanded in pace
with new legal requirements. New sections covering the organization and management, tax rules for holding companies, and market
communication were added.
A section on active ownership and the investment process was
added in 2002, and a section on corporate governance at Industrivärden was created for 2003. New International Financial Reporting Standards required expansion of the accounting section in
subsequent years, and a considerable amount of new terminology
was adopted. From 2002 to 2005, Industrivärden was named as
the best annual report among holding companies by the personal
investment magazine Aktiespararen.
203
Minutes of board meetings were bound
with a seal through 1985.
Industrivärden’s 2005 Annual Report
won an award as Best Annual Report
among Swedish holding companies.
Industrivärden’s offices
as cultural bearer
THEME
industrivärden didn’t have any office premises of its own
after its establishment in 1944 – its activities were conducted entirely within the framework of Svenska Handelsbanken. The only
employee was the president, who was also an executive of Handelsbanken. The bank did not charge Industrivärden for the president’s
salary or for consulting fees and office costs during the company’s
first year.
Industrivärden’s first own office premises were located on Västra
Trädgårdsgatan 7 in Stockholm, where the company was housed
from 1948 until 1967, when it obtained larger offices on Kungs­
trädgårdsgatan 16.
A telling illustration of the idyllic conditions that existed at the
office on Västra Trädgårdsgatan can be seen the arrangements that
were made in connection with a business trip by the president to
New York in autumn 1956. It was announced that each day a clerk
named Gadde was to be stationed in the president’s office between
11 a.m. and 12 noon, while at other times a sign on the door to the
office and a phone answering service were to provide instructions
that any messages were to be conveyed by phone to a special number at Handelsbanken’s notary department, where calls were to be
answered “Industrivärden.” A running record was to be recorded of
incoming calls. Any matters of business were to be forwarded to the
clerk, Gadde, who would relay more important matters to the company’s general counsel – a bank executive named Kyhlberg – who if
necessary would consult with Chairman of the Board Browaldh. All
204
Painting by
Bror Hjorth:
“Flowering
landscape”
(Industrivärden’s
art collection).
of this was recorded down to the last detail in the minutes of the
board meeting!
Industrivärden’s workforce increased gradually. A vice president was hired in 1963, and administrative staff were brought in,
increasing the number of employees in 1970 to six. Ten years later,
the workforce had increased only marginally, to seven. In the 1980s
the organization was expanded in connection with the acquisitions
of plm, Dacke and Bahco. By 1990 the number of employees had
thereby increased to 16. During the 1990s an extensive analysis operation was built up, bringing the number of employees in 2000 to
25. Since narrowing the focus of its operations through divestment
of the wholly owned industrial and trading businesses, Industrivärden’s staffing fell back to 18 persons in 2009.
The office premises at Kungsträdgårdsgatan 16 became inadequate in connection with Industrivärden’s expansion in the 1980s,
and in 1987 Industrivärden moved to modern premises at Hamngatan
6, on the top floor of a building with a view over Norrmalmstorg.
205
Sculpture by Karl Momen.
Painting by Lennart Jirlow.
Front cover of book on the Storgatan 10 property, published in 1991.
Through the acquisition of Fastighets ab Östermalm, Industri­
värden became the owner of a building at Storgatan 10 in Stockholm. In 1990, Industrivärden was given notice about a dramatic
increase in rent for its offices at Norrmalmstorg. Industrivärden’s
newly installed ceo, Carl-Erik Feinsilber, saw an opportunity to take
advantage of the office space that had been vacated on Storgatan.
The building at Storgatan 10 is in the Art Nouveau style and
centrally located near Östermalmstorg. The building was designed
by the architects Georg Hagström and Fritiof Ekman, who also
designed some 60 buildings in Stockholm’s Östermalm district, including several large buildings on Strandvägen. They also designed
buildings with movie theaters at street level, such as Palladium on
Kungsgatan and Sibyllan on Almlöfsgatan (today the Royal Dramatic Theatre’s “small stage”).
206
Painting by Sven X:et Erikson.
Painting by Sven X:et Erikson.
207
A painting by Helmer Osslund, “Autumn day at Torne Träsk” (1909), hangs over the
spiral staircase joining the different floors in Industrivärden’s head offices.
In 1991, the
renovation of
the Storgatan 10
building won the
Stockholm Building
Contractors
Association’s annual ROT (Renovation and Addition)
award.
The building at Storgatan 10 was built during from 1905 to 1907.
It has an austere Art Nouveau façade that is richly adorned with
flower motifs in gold leaf and cut décor surrounding the portal. The
entrance and stairwell have marble floors and walls of stucco lustro.
The stairwell window wells are painted with beautiful rose motifs.
The building has five floors facing the street and includes a garden
house in back. The residential floors are furnished with built-in
green benches and door lintels featuring stylized flowers.
The building was thoughtfully renovated in 1990, during
which the façade décor was hand-painted with genuine gold leaf.
In March 1991 some 15 Industrivärden employees moved in to
their newly restored offices. The original lavish residential apartments had been converted to functional and modern office space
on three floors that are connected with a spiral staircase designed
specifically for the premises. In connection with the expansion of
Industrivärden’s operations during the 1990s, a floor in an adjacent
property to Storgatan 10 was also renovated.
208
Painting by Ewald Dahlskog: “Woman at shoreline” (1917).
Carl-Erik Feinsilber believed that a sense of well-being is created in a company that takes responsibility for its shared cultural
heritage. The restoration attracted attention through various awards
and distinctions.
The Storgatan 10 building was owned for more than forty years
by an art dealer named Gösta Stenman, whose art gallery on the
third floor was one of the finest in Stockholm. As the building’s
new owner, Industrivärden restored it to its original character.
The rooms were adorned with art that was characteristic for the
period – with many including art by artists who had exhibited in
Stenman’s gallery. Today the collection also includes older pieces
from Industrivärden’s previous offices as well as art from the former
subsidiaries Promotion and Bahco.
The publication Konstvärden hos Industrivärden (Eng. trans.:
“Art value at Industrivärden”), published in 2009, describes in text
and pictures the artworks that adorn Industrivärden’s offices. A
number of these works are also shown in this book.
209
Some prominent people on
the board and management
THEME
Helmer Stén (Chairman of the Board 1944–50) was President
of Handelsbanken from 1923 to 1944 and Chairman of the
bank from 1944 to 1950. Starting in 1914, Stén was head of
Provinscentralen, the department within Handelsbanken that
was created to handle operations outside of Stockholm. As
President of Handelsbanken, he was responsible for sorting
out the crisis that the bank found itself in during the 1930s
and for restoring trust in the bank, which he succeeded well
at. Helmer Stén passed away in 1950.
Ernfrid Browaldh (Chairman of the Board 1956–65) was originally an attorney in Västerås and served as an ombudsman at
Handelsbanken’s Västerås branch. He moved to Stockholm in
1923 as the bank’s industry expert, was appointed as a vice
president five years later, and in 1944 he became President of
Handelsbanken. In 1955 he was elected as Vice Chairman of
the Board. Ernfridh Browaldh played an active role in many of
the major structural deals that Handelsbanken and subsequently Industrivärden participated in. He was Chairman of
the Board or a board member for all of Industrivärden’s first
portfolio companies. Ernfrid Browaldh passed away in 1982.
Ernfrid Browaldh
Tore Browaldh
Tore Browaldh (Chairman of the Board 1965–88), Ernfrid
Browaldh’s son, worked during various periods for the Swedish Ministry of Finance, the Research Institute of Industrial
Economics, the European Council and the Swedish Employers’
Confederation (SAF). He was brought in to Handelsbanken
as President in 1955 and was appointed as Chairman of
the bank in 1966. He served as Chairman of the Board of
Industrivärden from 1965 to 1988. Tore Browaldh was a man
with deep humanistic interests and wrote three memoirs. He
was also a talented jazz pianist. Tore Browaldh passed away
in 2007.
Jan Wallander (Vice Chairman of the Board 1984–90) was an
associate professor of economics and head of the Centre for
Business and Policy Studies (SNS) and the Industrial Institute
for Economic and Social Research (IUI) before being appoint­
ed as President of Sundsvallsbanken in 1961. Wallander
was Pres­ident of Handelsbanken from 1970 to 1978 and
Chairman of the Board from 1978 to 1991. He introduced
a decentralized organization at Handelsbanken, which was
structured into a number of regional banks with an independent position. During Wallander’s tenure, the budgeting
process at Handelsbanken was done away with, and focus
was shifted to profitability. The profit-sharing foundation
Oktogonen was formed under his direction, and a large share
of its assets were invested in Handelsbanken stock.
Jan Wallander
Bo Rydin
210
Carl-Erik Feinsilber (President and CEO 1990–1994, board
member 1988–2001) was President of the travel agency
Nyman & Schultz and CFO of Gränges before becoming
President of Promotion from 1979 to 1989. He was named
President and CEO of Industrivärden at short notice in 1990.
Feinsilber had broad cultural interests, primarily in art and
music, and was Chairman of Föreningen Kultur och näringsliv
(the Culture and Business Association). Carl-Erik Feinsilber
passed away in 2004.
Clas Reuterskiöld (President and CEO 1994–2001, board
member 1994–2003) was President of the Bonnier companies
Billingsfors, Grafo Print, Solna Offset and Marieberg before
succeeding Carl-Erik Feinsilber – first as President of Promotion in 1990 and later as President and CEO of Industrivärden.
During Reuterskiöld’s tenure a large share of Industrivärden’s
industrial operations were divested through the sales of PLM,
Thorsman and the property company Fundament, as well as
the shareholding in AGA.
Carl-Erik Feinsilber
211
Clas Reuterskiöld
Bo Rydin (Chairman of the Board 1988–2002, board member
since 1973) was CEO of SCA from 1973 to 1990 and Chairman of the Board from 1988 to 2002. His broad base of industrial experience also included positions as Chairman of the
Board of Skanska, Graninge, SAS’s representative assembly
and the Federation of Swedish Industry, and as Vice Chairman
of Handelsbanken and Volvo. Bo Rydin was also Chairman of
the Board of the Royal Swedish Opera for many years.
Tom Hedelius (Chairman of the Board since 2002, board member since 1991) was President of Handelsbanken from 1978
to 1991 and Chairman of the Board from 1991 to 2001. He
is also Chairman of the Board of B&B Tools, the Jan Wallander
and Tom Hedelius Foundation, and a board member of L E
Lundbergföretagen and SCA, among others.
Anders Nyrén (President and CEO since 2001) was Executive
Vice President and CFO of Skanska and Securum before his
appointment as President and CEO of Industrivärden. Under
Hedelius and Nyrén’s direction, Industrivärden was transform­
ed into a pure holding company after the last wholly owned
business was divested in 2006. The equities portfolio was
concentrated to eight large and two smaller holdings. A new,
major holding was added through the purchase of stock corresponding to 8.5 percent of the votes in Volvo.
Tom Hedelius
Anders Nyrén
List of board members, auditors and
executive management
Chairmen of the Board:
Sven Ågrup (1973-1975)
Auditors:
Helmer Stén (1944-1950)
Arne Gadd1 (1974-1976)
S Linnér (1944-1954)
Sten Westerberg (1950-1955)
Per Lindberg (1978-1988)
P O Öhrling (1944-1968)
Ernfrid Browaldh (1956-1965)
Olof Kyhlberg (1978-1983)
H Francke (1955-1958 and 1960)
Tore Browaldh (1965-1988)
Anders Wall (1982-1989)
G Dahlgren (1959 and 1965)
Bo Rydin (1988-2002)
Jan Wallander (1984-1990)
R Sundfeldt (1966-1968)
Tom Hedelius (2002-
Kjell Brändström (1986-1989)
Olof Wirström (1970-1971)
Börje Rudewald (1987-1993)
Tore Henckel (1970-1978)
Board members:
Carl-Erik Feinsilber (1988-2001)
Torsten Lilliestierna (1972-1980)
Axel Bergengren (1944-1945)
Sven Söderberg (1989-1993)
Bertil Edlund (1979-1998)
Wilhelm Klingspor (1944-1954)
Erik Penser (1990-1992)
Sigvard Heurlin (1981-1991)
Fabian Tamm (1944-1955)
Ulf Pernvi (1992-1998)
Sten Westerberg (1944-1955)
Tom Hedelius (1991Chaiman from 2002)
K F Göransson (1945-1946)
Marcus Storch (1992-1996)
Anders Lundin (2005-
Torsten Hèrnod (1947-1956)
Inga-Britt Ahlenius (1994-2002)
Allan Wettermark (1947-1971)
Clas Reuterskiöld (1994-2003)
Presidents:
Ivar Rooth (1949-1950)
Sverker Martin-Löf (1996-1997
and 2002-
Stig Ödmark (1944-1946 and
1960-1966)
Björn Wolrath (1996-1999)
Allan Wettermark (1947-1955)
Lennart Nilsson (1997-
Ferdinand Wallberg (1956-1959)
Finn Johnsson (2000-
Nils Berggren (1967-1976)
Anders Nyrén (2001-
Per Lindberg (1976-1986)
Arne Mårtensson (2002-2005)
Kjell Brändström (1986-1989)
Boel Flodgren (2002-
Carl-Erik Feinsilber (1990-1994)
Fredrik Lundberg (2004-
Clas Reuterskiöld (1994-2001)
Lars O Grönstedt (2006-2008)
Anders Nyrén (2001-
Gunnar Ljungqvist (1950-1969)
P Wåhlin (1952-1955)
Per Carlsson (1955-1957)
Fabian Lundquist (1955-1966)
Ferdinand Wallberg (1956-1960)
C-G Klingspor (1957-1971)
Hjalmar Åselius (1957-1964)
Jan Wingårdh (1960-1964 and
1966-1968)
Stig Ödmark (1961-1968)
Olof Faxander (2009Executive Vice Presidents:
M Pontin (1965 and 1967-1972)
Eije Mossberg (1965-1972)
Ingvar Pramhäll (1999-2005)
1
Appointed by the government.
Nils Berggren (1963-1966)
John Mattson (1969-1985)
Folke Pehrsson (1976-1985)
Ivar Lindquist (1970-1972)
Lars Bertmar (1988-1990)
Olof Wirström (1971-1986)
Carl-Olof By (1990-
Stig Ramel (1972-1996)
Lennart Engström (2000-2001)
Sven Häggqvist (1973-1977)
Bengt Kjell (2003-2009)
Allan Larsson1 (1973-1974)
Bo Rydin (1973-2002;
Chairman 1988-2002)
212
Bibliography
Industrivärden’s own
documentation
Anniversary publications
Interviews
SCA 50 år
Lars Bertmar
Annual Reports from 1944 and
later
Industrialisten Bo Rydin: 30 år
med SCA
Sven Hagströmer
Minutes of board meetings
from 1944 and later, incl.
presentation memos
Karl-Gustaf Hildebrand: I omvandlingens tjänst. Svenska
Handelsbanken 1871–1955
Fredrik Lundberg
Issue prospectuses
Handelsbankens historia från
1871 (booklet)
Tom Hedelius
Sverker Martin-Löf
Börje Nordenö
Anders Nyrén
Annual reports and websites
of portfolio companies
Ericssonkrönikan 125 år
1876–2001
Erik Penser
Clas Reuterskiöld
Literature
Att förändra världen – En berättelse om Lars Magnus Ericsson
och hans efterföljare
Industrivärden 50 år (anniversary
booklet, 1994)
Johan Lybeck: Finansiella kriser
förr och nu (1992)
Ulf Myrberg: Blandade investmentbolag (1987)
Lundbergs 50 år 1944–1994
Investor 75 år 1916–1991
Ratos och anorna 125 år
1866–1991
Carnegie De första två seklen
Lars-Erik Thunholm: Oscar Rydbeck och hans tid (1991)
Affärsvärldens hundra år
1901–2000
Lars-Erik Thunholm: Ivar Kreuger
(1995)
SEB 150 år 1856–2006
Stig Ramel: Pojken i dörren (1994)
Jan Wallander: Bankkrisen (1995)
Holmen – En resa i fyra sekler
1609–2009
Jan Wallander: Livet som det blev
(1997)
Newspapers and journals
Jan Wallander: Wennergrenstiftelserna (2002)
Jan Wallander: Mellan Scylla
och Charybdis: röstvärden,
korsägande och makten över
företagen (1986)
Fermenta fakta och erfarenheter.
Rapport till Stockholms fondbörs (1988)
Boken om Storgatan 10 (1991)
Konstvärden hos Industrivärden
(2009)
Volvo 75 år 1927–2002
Affärsvärlden
Byggindustrin
Dagens Industri
Dagens Nyheter
Finanstidningen
Finans Vision
Papper & Kontor
Svenska Dagbladet
Sydsvenska Dagbladet
Svensk Skattetidning
Veckans Affärer
213
Mats Qviberg
Bo Rydin
Bo Söderberg
Anders Wall
Jan Wallander
214
Printing Fälth & Hässler, Värnamo 2011
Photography q Image ab, Ingvar Karmhed, Anna Hållams and others
Design Studio Bang
isbn 978-91-633-6349-8
215
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