Business Model
Structured Value Creation
Industrivärden’s core business is to invest in listed Nordic companies with good potential for value appreciation, and through active ownership contribute to continuous growth in value of 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 while reducing Industrivärden’s equities risk.
Successful Business Model
Industrivärden has many years of experience in value-creating active ownership and works according to a tried and tested business model. Ultimately Industrivärden’s success can be credited to it’s employees and 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. Every portfolio company is analyzed with respect to potential growth in value. Quantitative goals are evaluated on a continuous basis, as are various forms for a future exit. Major emphasis is put on continuous comparisons with longterm investments in other listed companies. Investments are evaluated continuously over time with a 5 to 8 years 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, 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 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, capital structure, corporate governance, and so on. One of the most central matters for the respective companies’ boards is to appoint the CEO and continuously evaluate the work of the company’s management.
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 recommendations 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 corporate governance and represents Industrivärden on the portfolio companies’ nominating committees.
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 controls and follow-up, 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 as investment heads.
