The business area has a relatively low risk profile as the Core Investments have well proven business models, established market positions and are actively traded, listed companies and are therefore liquid. Since these holdings are listed, the business area is affected by the general stock market environment in Sweden and by other financial markets.

Our investment horizon is long and the business area generates returns in the form of value appreciation, share redemptions and dividends. According to our dividend policy, a high percentage of the dividends received from the Core Investments are distributed to Investor’s shareholders.

The return objective is to exceed the risk-free interest rate plus a risk premium over a business cycle. This currently corresponds to 8 to 10 percent per year. The return requirement is set on the basis of the relatively well established operations of the companies, thus their more limited operational risk. The combination of listed securities and the relatively low financial leverage in the companies makes the risk level limited and the return requirement is therefore lower than for our other business areas.

Strategy for Core Investments

ATTRACTIVE MIX OF INVESTMENTS
Having the right mix of investments is important for creating long-term sustainable value. We want to own best-in-class companies or companies that have the potential to become best-in-class. We are convinced that companies with leading market positions, a high degree of innovation and a strong corporate culture and management have better prospects than their competitors to act on emerging opportunities in the market and generate higher long-term returns than their competitors. The long term potential of our companies is evaluated on an ongoing basis to identify if we want to increase our investment or divest the holding in the long term.

VALUE CREATION THROUGH COMMITTED OWNERSHIP
We have a substantial and clear ownership position in the Core Investments. Through that position, we gain strategic influence and can therefore influence the choice of board members. Since the board has principal responsibility for driving long-term value creation, we place major emphasis on getting the right board in place with the appropriate expertise and experience geared to the challenges the company faces.

The board has the important responsibility to challenge and question management. However, the board must also be prepared to support management with difficult decisions that may have a negative short-term effect but which strengthen the company for the future. Our board representatives are supported by analysts who monitor the companies, their competitors and their markets on an ongoing basis. To contribute to the development of the Core Investments in a structured manner, we develop a value creation plan for each company that includes goals for profitability, growth, capital structure and industrial structure.

Information updated 2008-08-15 14:42:51