Structures 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.
Clear investment criteria
Investments are made in companies with proven business models and considerable opportunities for future growth in value.
Holdings
- Mid- and large cap listed Nordic companies.
- Companies with business models that can be applied in several markets.
- Companies with a good ability to generate growth in cash flow.
- Leading positions in selected market segments.
- Strong potential for growth in value through active ownership.
- Ownership stakes that enable significant influence.
Portfolio
- Fully invested in equities.
- Concentration on a limited number of shareholdings.
- Active ownership with long-term investment horizon.
- Borrowing provides leverage in equities portfolio.
Analysis
Industrivärden has a lean organization that is distinguished by high flexibility and short decision-making channels. The Company has 20 employees, eight board members and an extensive contact network with specialist know-how. Operations are project-oriented and involve personnel from both the investment organization and staff functions.
Each portfolio company and potential new investment candidate is monitored by an investment team. The investment team performs a company analysis that culminates in a so-called fundamental 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. 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 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.
Short-term trading
Industrivärden has a separate, short-term trading function to support the investment activities with market information and to execute investment decisions. In an effort to generate excess returns, short-term trading is conducted in equities and equity-related instruments. Value is created primarily through derivative transactions in the shares of existing portfolio companies.
By monitoring the market's valuation of the portfolio companies over time, Industrivärden has gained a good feeling for the market's pricing of the portfolio companies' stocks. To utilize this knowledge, short-term derivative transactions are conducted to a limited extent on a continuous basis in Industrivärden's long-term equity investments. Industrivärden's short-term trading, which has been highly successful, has generated earnings of approximately SEK 1 billion since the start in 2003.