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 in its portfolio companies. The role as active owner requires that Industrivärden can exercise significant ownership influence and entails a long-term investment horizon.
An active ownership perspective fosters a keen understanding of the portfolio companies' businesses, operating environments and continuing development. Contributing to value creation in the portfolio companies increases asset values at the same time that active involvement and knowledge about the companies reduces Industrivärden's equities risk.
Successful Business Model
Industrivärden has many years of experience in value-creating active ownership and works according to a well proven business model. Industrivärden's success can ultimately be credited to its employees and well established work processes.
Highly refined work process
Work is conducted in four processes, where most of Industrivärden's resources are dedicated to value-creating active ownership. Each portfolio company is analyzed with respect to potential growth in value. Quantitative goals are evaluated on a continuous basis, as are various options for a future exit. Major emphasis is put on continuous comparisons with long-term investments in other listed companies. Investments are evaluated continuously with a 5–8 year time horizon.
Active ownership
Industrivärden's influence in its portfolio companies is grounded in significant ownership stakes and a strong position of trust. From this foundation, Industrivärden takes an active ownership role through interaction with other major owners in the aim of finding ways to build value in the shareholdings.
Active ownership is exercised by directors on the boards of the portfolio companies who have ties to Industrivärden, through participation in the respective companies' nominating processes, and through direct dialog between Industrivärden's investment organization and leading representatives of the portfolio companies.
Active ownership is conducted from a platform of continuous, fundamental analysis and an action plan for value creation. The work is conducted from an overarching ownership perspective and focuses on such matters as strategy, company structure, market potential, capital structure and corporate governance. One of the most central duties of the respective companies' boards is to appoint the CEO and continuously evaluate the work of the company's management. Active ownership gives company management the security to act with a long-term focus.
Board representation
Active ownership is ultimately conducted through board representation. The portfolio company's chairman normally has ties to Industrivärden, which as a rule is represented by at least one director on the company's board. Such directors are normally also members of Industrivärden's board.
Nominating committee work
The composition of the boards of the portfolio companies is of central importance, which is why Industrivärden participates actively in the preparation work behind nominations of directors for company boards. Normally, the nominating committee chair for a portfolio company has ties to Industrivärden, which as a rule is represented by at least one director. Industrivärden's Executive Vice President, Carl-Olof By, is responsible for the Group's corporate governance work and represents Industrivärden on the portfolio companies' nominating committees.
Analysis
Industrivärden has a cost-efficient organization that is distinguished by high flexibility and short decision-making channels. The Company has just over 20 employees, seven board members and an extensive contact network with specialist expertise. Operations are project-oriented and involve personnel from both the investment organization and staff functions.
Each portfolio company and potential newinvestment candidate is monitored by an investment team. The investment team performs a fundamental company analysis that culminates in a so-called core analysis. Based on this analysis, the team continuously updates an action plan, which serves as a platform for the design, implementation and evaluation of Industrivärden's active ownership. The aim is primarily to identify and describe various opportunities for value growth as well as strategic measures for achieving this value.
All analysis is based on external information material. Each investment team presents its action plan on a continuous basis to the director or directors with ties to Industrivärden serving on the board of the portfolio company. In this way, Industrivärden's representatives are provided with a current picture of identified opportunities and measures. The investment teams also conduct an ongoing dialog with the company management of the respective portfolio companies. By working with sound, wellresearched 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 company for future value creation.
Executive Management and Investment Committee
The CEO is responsible for Industrivärden's day-to-day administration, which is handled by the Company's Executive Management. This work involves strategic, organizational and financing matters as well as control and followup, among other things. Industrivärden's Executive Management also serves as the Investment Committee, which adopts action plans and makes investment decisions within set mandates. Representatives of the Executive Management participate on the investment teams, with overarching responsibility.
Industrivärden works with a lean and flexible organization, thus enabling the Executive Management to participate actively in the operating activities within their respective areas. A substantial part of the CEO's work time is dedicated to board work within the framework of active ownership in the portfolio companies. Other members of the Executive Management can also contribute with specialist expertise on Industrivärden's investment teams.
