Owning and developing best-in-class companies

Vision

To become the premier investor, consistently developing best-in-class companies.

Business concept

To generate attractive long-term returns by investing in companies with solid potential for value creation and applying our experience, knowledge and network to make them best-in-class.

Goal

To grow our net asset value per share, including reinvested dividends, in excess of market cost of capital, over a business cycle. Market cost of capital is defined as the risk-free interest rate (average interest for ten-year government bonds) plus a risk premium.

We aim to grow our share of Operating Investments further by investing in companies with a return potential exceeding the business area’s return requirement. We also aim to increase our portion of capital invested in unlisted companies to 25 percent.

Strategies

INVEST IN ATTRACTIVE COMPANIES
A key factor in long-term value creation is to steadily renew the portfolio and to own companies that can generate high future returns. Investor’s experience from developing companies, our unique network, our strong capital base and our flexible investment horizon give us a competitive edge as an investor. We focus on:

investing in companies with an attractive return potential relative to their risk profile,
having the expertise and structure to act on attractive investment opportunities regardless of a company’s development stage, sectors and geographic markets where we have an advantage,
strengthening ownership positions in selected existing investments when attractive opportunities arise and growing the share of unlisted investments, which provides opportunities for creating a higher return potential and generating proprietary returns for our shareholders.

DRIVE VALUE IN COMPANIES
Our work to create value in companies aims to make them best-in-class. We accomplish this by:

having a substantial stake and active board role to drive value creation plans focusing on improvements in the areas of profitability, growth, capital structure and industrial structure,
giving companies access to our unique international network of contacts and experts and
establishing clear goals and continuously following up and evaluating the performance of our companies in absolute terms as well as relative to their competitors.

EXIT HOLDINGS
We continuously evaluate the long-term return potential of all holdings. If our assessment shows that the potential of a company does not meet our requirements, or if its value can be higher in another ownership structure, we look to exit the holding in a value-creating way.

FINANCIAL STRENGTH
Our strategy is to maintain high financial flexibility that allows us to act on investment opportunities, regardless of the economic situation. An appropriate leverage level for us is 5–10 percent over a business cycle, based on risk, the desired financial flexibility and current tax considerations. According to our policy, leverage is not to exceed 25 percent, or go below zero, for any extended period of time.

RIGHT PERSON IN THE RIGHT PLACE
Having the right person in the right place at the right time is of the greatest importance, since it is people who build successful companies. Therefore, we focus on:

using and developing our unique network of prominent business leaders and specialists,
actively working on having the right management teams and boards in our holdings,
steadily developing the knowledge and experience of our employees and
providing remuneration to employees, managements and boards that is linked to a large extent to long-term value creation in the companies, preferably by having a substantial ownership stake. This creates a common driving force that is aligned with the goals of the owners.

Information updated 2008-03-25 13:38:45