Investors House executives Petri Roivainen and Tapani Rautiainen have purchased the Ikaalinen Spa (Ikaalisten Kylpylä) properties through Ikaalis-Invest Oy, a company they founded. The transaction comprises approximately 30,000 square meters and was carried out in connection with Investors House Oyj’s business operations.
Was the deal so favorable that it couldn’t be left to Investors House? In any case, it raises questions that the management of a listed company operates in the same industry and in the same context as the company they lead. According to Catella Oy, the transaction was executed within the same portfolio as Investors House’s deals.
I also find it undeniably peculiar! As leaders of a publicly traded company, their role is to act as a hawk in the market for IH’s benefit. If at the same time they are doing the same thing in the same sandbox for their own account, it naturally raises questions. Are they competing with IH? Are they running their own businesses on IH’s coattails? If the deal was good, why didn’t IH get it – if not, why would they have acquired it for themselves either?
No matter how pristine the truth may be, such a situation creates a gray area and hazy visibility for investors. Therefore, I would hope they stick to real estate transactions/development through IH and personally invest in real estate in the same sandbox only by buying IH shares.
In general, IH’s business includes the structuring of investment properties, meaning the company is involved in, for example, large real estate arrangements where a property portfolio is divided into smaller parts and separate buyers are sought for them. IH then receives a fee for this. We estimate that an example of such an arrangement was the acquisition of two office campuses from Technopolis in 2016. The fact that IH is involved in an arrangement where it does not itself acquire all the properties is not exceptional.
The fact that the CEO and Chairman of the Board are buying a part of the properties themselves, of course, raises questions. The fact that the property was not acquired for IH could be due, for example, to it not meeting IH’s investment criteria or simply to the company not being able to finance the acquisition. From the press releases, it can be concluded that the rentable area in Ikaalinen was approximately 25,000 square meters (the hotels in Pori and Kotka were 4,654 square meters, and the entire arrangement was about 30,000 square meters). If the acquisition of the Ikaalinen properties was carried out at the same square meter price as the hotels in Pori and Kotka (approx. 408 euros), the purchase price was roughly about 10 million euros. The Ikaalinen complex is also, in our understanding, in such a condition that it requires renovations. These could be, for example, 5 million euros (200e/square meter). Thus, the total investment of 15 million euros would be significant, and financing such a large acquisition might not necessarily be easy for IH after the hotel acquisitions and the recent purchase of the apartment building in Vaasa.
That is a competing business with IH, which is why I consider it highly questionable. Regular employees are prohibited from engaging in competing business with their employer in their employment contracts. Additionally, if the CEO and Chairman of the Board are engaging in real estate investments of this magnitude with their personal capital, the question inevitably arises as to which balance sheet, IH’s or their own, the best investments are being sought for.
Aamulehti specifies the buyer company’s name as Ikaalia Invest Oy.
"Ikaalia Invest’s ownership is divided in half, with Maakunnan Asunnot oy, owned by Roininen and Rautiainen, owning 51 percent, and Roininen’s family’s investment company Corecapital owning 49 percent.
‘We see potential in the Ikaalinen spa,’ Roininen explains the property acquisition."
It’s good that the executives have money when the employer’s resources run out.
How do they manage to run such businesses as side jobs when leading a listed company is quite demanding?