(Updates with more comments from Solidium CEO on investments)
By Jussi Rosendahl
(For other news from Reuters Nordic Investment Summit, click
* Finnish state fund owns stakes in 11 listed companies
* It invested $425 million in Outokumpu share issue
* Fund CEO says investment decisions free from politics
By Jussi Rosendahl
HELSINKI, Sept 30 Steel company Outokumpu
should try to solve its own problems even though its
heavy debts have raised the prospect it might need more money
from shareholders at some stage, the head of Finland's state
investment fund Solidium said.
While Finland is often listed among the most innovative
economies and remains triple-A rated, government funding is
still badly needed in the country of 5.4 million people which
has a limited pool of private capital.
Kari Jarvinen, Solidium's managing director, told the
Reuters Nordic Investment Summit that the fund was making its
long-term investment decisions independent of political pressure
to help out troubled Finnish companies.
"It is better that the company tries to sort out its
problems by itself. The company already had a 1 billion (euros)
rights issue only one-and-a-half years ago," Jarvinen said when
asked about Outokumpu's finances. "It is paramount that these
companies find ways to be profitable in the future."
Solidium holds stakes worth in total 7.7 billion euros in 11
Finnish listed companies including paper maker Stora Enso
and investment and insurance group Sampo.
Founded in 2009, its mandate is to invest government money
in businesses deemed to be of national importance, while
avoiding political interference.
Solidium invested 314 million euros ($425 million) in
Outokumpu's share issue last year when the company needed money
to buy ThyssenKrupp's stainless steel unit Inoxum.
Solidium is now Outokumpu's second-biggest shareholder with a
stake of around 22 percent.
But Outokumpu might need more cash. The company, like other
steelmakers in Europe, has faced weak demand as a result of
customers holding back from purchases because of falling steel
prices. At the end of the second quarter, Outokumpu's
debt-to-equity ratio was almost 121 percent, compared with 103
percent at the end of March.
Solidium earlier this year backstopped a share issue of
Talvivaara , lifting its ownership in the
troubled miner to 17 percent.
The move helped the company's nickel mine to keep running,
but raised questions among the public and the media over whether
the fund should be keeping alive such a troubled business.
Jarvinen dismissed suggestions the fund was being driven by
"We are looking for returns... any other angle into our
portfolio would be wrong," he said. "We took a calculated risk
in Talvivaara, let's see how it goes."
However, he said Solidium was not a portfolio investor
seeking quarterly returns, but rather a long-term owner.
"Our view is to look at companies in the longer term and if
we see there is a potential to change the company and its
performance, we will stay and work together with the company."
Jarvinen noted that many large institutional investors had
taken money out of Finland since the 1990s, and that pension
funds' investments would also start diminishing due to
increasing payouts for an ageing population.
Jarvinen also commented on the Helsinki bourse's poor record
in attracting new listings. Once the hot-bed of technology
listings, the exchange has in recent years only seen companies
spun off from others or dual-listings, while its latest
fully-fledged main-list initial public offering took place in
"It is a very worrisome development ... We should do all we
can to make sure the Helsinki Stock Exchange remains vibrant and
is attractive to new companies to be listed here."
($1 = 0.7385 euros)
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(Additional reporting by Terhi Kinnunen; Editing by Ritsuko
Ando and Pravin Char)