UPDATE 1-Sweden's Kinnevik to hand out Millicom stake to shareholders

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STOCKHOLM, Sept 17 (Reuters) - Investment company Kinnevik will hand out its 37.2% stake in telecoms operator Millicom to shareholders as it presses on with its strategy to increase its exposure to private Nordic companies.

Sweden’s Kinnevik said in June it had dropped its plan to exit its holding through a public offering, citing unfavourable market conditions.

The company will stop paying cash dividends and instead pay out excess capital generated by its investment activities in the form of extraordinary dividends, it said on Tuesday.

“After the distribution of our shareholding in Millicom, I believe our shareholders will benefit from Kinnevik having a higher share of its capital invested in the unlisted, leading consumer businesses of tomorrow,” CEO Georgi Ganev said in a statement.

The company said it planned to propose the dividend to an extraordinary shareholders’ meeting in time for the distribution to be carried out before the end of 2019.

Under Ganev, Kinnevik has been pursuing a strategy of increasing its exposure to private Nordic companies. It is also focusing on digital businesses such as Swedish telecoms company Tele2 and online retailer Zalando.

“Kinnevik’s ambition is to be the go-to public company for investors seeking exposure to the best entrepreneurs building leading digital businesses in Europe, the Nordics and the U.S.,” Ganev said.

Kinnevik shares fell 2.2% by 1155 GMT while the Swedish-listed shares in Millicom, a cable and mobile operator in Latin America and Africa, fell 4.1%. (Reporting by Johannes Hellstrom and Helena Soderpalm; editing by Niklas Pollard and Louise Heavens)