This is indeed what these larger Nordic private equity investors do, and they hardly make any so-called pure financial investments. I, for one, would see it as a very likely option that Altor will make some kind of moves within a few years.
The structural lifespan of PE funds doesn’t really make it sensible to buy a small stake from the listed market and let the stock market purely dictate the returns; fund investors don’t need a manager with 1%/15% fees for that. Almost systematically, these involve precise plans with several different scenarios, which is a very positive thing for small shareholders as well.
LSEG Lipper Fund Awards 2024 has named Mandatum’s investment fund as the best in Europe in two different categories.
Mandatum’s Nordic High Yield Total Return fund, which invests in bonds with higher return expectations, was awarded as the best fund in Europe investing in high yield bonds over three- and five-year review periods. There were 31 and 25 funds nominated in these categories. Lipper Awards are presented annually to funds that have performed strongly compared to their peers.
The Mandatum Nordic High Yield fund was established in 2014 and primarily invests in corporate bonds of Nordic companies that are either unrated or have a high yield credit rating. Mandatum Asset Management Ltd acts as the fund’s portfolio manager.
The assets under management of the Nordic High Yield fund exceeded the EUR 500 million milestone in January 2024, and together with strategies investing in the loan market, total client assets currently exceed EUR 1.6 billion. Mandatum’s asset management has offered loan investment products to its clients since 2016, and over the last four years, the assets managed by loan strategies investing in European senior loans have grown by nearly 600 percent.
A couple of highlights: Mandatum Asset Management and Richard Gröttheim have agreed on a collaboration where Gröttheim will serve as an advisor to MAM. The objective of the collaboration is to support Mandatum’s growth in Sweden and Denmark.
“Mandatum’s asset management business in the Swedish and Danish markets progressed as planned during 2023, but our work for growth continues. We warmly welcome Richard Gröttheim to support us, particularly in achieving our goals related to international growth, and we are pleased to have access to Gröttheim’s extensive experience and valuable network,” says Lauri Vaittinen, CEO of Mandatum Asset Management.
That interview provided a good summary of what is worth monitoring at Mandatum and what Petri said he follows in the day-to-day business: net client cash flows (i.e., how much net money comes in for management), which grows the capital-light business, customer satisfaction, margins (to ensure investment products aren’t sold too cheaply), and of course, employee satisfaction because this is so strongly a people business.
Karo’s comment, perhaps intentionally provocative, about the with-profit business was very descriptive of a typical Finnish attitude: whether a poor business could be continued simply because it happens to be profitable.
With-profit is like a low-yielding potato field that (metaphorically) ties up a lot of labor and time, whereas capital-light business is a greenhouse producing high-value tomatoes for the market—a juicy business. It is simply better to distribute the yields of that potato field to the owners and invest in that juicy business.
Niemisvirta made a good impression and seems to have things under control. In this thread as well, Mandatum has been questioned as an investment target precisely because of “declining results”. This interview further clarified how the company generates its earnings.
I recently divested my Mandatum shares, but this episode made me reconsider—or actually convinced me—that it might be a quite good choice as a long-term investment. One should always have one asset manager in the portfolio, but let’s see if I bet on the wrong horse.
I had previously decided to part with these because I prefer and find smaller asset management companies more interesting and easier to understand. I’ll have to keep an eye on it
Could Mandatum and Carnegie Make a Match? – Swedish Private Equity Firm Makes Its Move
Swedish private equity firm Altor soon disclosed that it owned eight percent of Mandatum. At the time, Herman Korsgaard, the director responsible for Altor’s Mandatum investment, stated in the newspaper Dagens Industri that Altor had no intentions of buying more Mandatum shares.
Along the way, their minds changed. Now, the state investment company Solidium has sold its Mandatum stake to Altor in February. The selling price per share was 3.95 euros. As a result of this transaction, Altor’s ownership stake in Mandatum rose to 16.6 percent.
Altor also owns Carnegie, which is known for, among other things, investment banking and wealth management services provided to private individuals.
Mandatum published its notice of General Meeting last week. The nomination committee proposes that Altor’s Herman Korsgaard be elected as a new member of the company’s board of directors.
According to Osuuspankki, Mandatum’s board is seeking authorization to buy back 9.96 percent of the share capital. So, a fairly large share buyback program would be coming. Has there been any previous mention/news about this? I couldn’t find any.
“The Board of Directors proposes that the Annual General Meeting authorize the Board to decide, in one or more installments, on the repurchase and/or acceptance as pledge of a maximum of 50,000,000 of Mandatum plc’s own shares. The proposed maximum number of shares corresponds to approximately 9.96 percent of all the company’s issued shares.”
Seems like a pretty classic boilerplate proposal. The law allows for 10 percent ownership, and the authorization is just to ensure that treasury shares can be repurchased if they want to. Most likely, no program will actually be launched, though.
Share buybacks could, in a way, suit a company like Mandatum quite well. Of course, this goes completely against the company’s dividend policy, so expecting large-scale buybacks on a continuous basis is probably overly optimistic?
The company is a true ideological fortress for the dividend crowd, as the official target itself is to transfer €500 million of the owners’ money directly into the owners’ pockets over 3 years.
There are no tax consequences with share buybacks, and with the stock valuation looking cheap, shareholders could be on the side of net beneficiaries.
At current levels, converting a €165 million dividend into share buybacks would eat away roughly 40 million shares from the share count every year, or over 8%. The share count would be halved in about seven years, ceteris paribus.
Largest shareholders on the selling side, -853,353 shares. The largest increasers were OP Life Insurance and Nordea.
Small +0.25% increase in ownership among nominee-registered holders.
At the end of January 2024, there were 24 shareholders owning more than 1,000,000 shares. Of these, 19 appeared on the list of largest shareholders, meaning 5 were “hidden” behind nominee registration. In total, there were 11 shareholders under nominee registration. At the end of February, the number was the same (24), but the number of shares under nominee registration increased by 21,437,913, the lion’s share of which is explained by the Altor-Solidium transaction, which involved over 33 million shares. This means some entity under nominee registration reduced its holdings quite significantly in February, as the net increase was only those 21.4 million shares.
This brings us to the March report: there are now only 17 entities on the public shareholder list with at least one million shares, and 22 entities in total owning more than a million shares. That’s -2 on the public list and -2 including nominee registration, meaning no one under the register has reduced their holdings below the million-share mark. No new names have appeared in the nominee register either, so it remains the same 11 as in previous months.
What is the point of this message? There isn’t much in terms of pure fact. As a fact, those 11 names, or a small group of them, have increased their holdings from the market by 1,216,758 shares or 0.55 percentage points. In mid-February, after the Solidium transaction, I wrote: “Now the combined share with their fund is 16.62%, meaning they can keep buying shares from the market up to 19.9% without a flagging notification.” If the party making the purchases is Altor, there is still about 2.7% or approximately 6 million shares to go before they have to flag.
