Finland's investment arm to take more active board role

HELSINKI (Reuters) - Finland’s investment arm Solidium is stepping into the boardrooms of the companies it owns stakes in, to promote the interests of the firms themselves rather than the country, its managing director Antti Makinen said.

Solidium CEO Antti Makinen poses for a picture in Helsinki, Finland February 22, 2018. REUTERS/Jussi Rosendahl

Solidium manages minority holdings in 12 major listed Finnish companies, which are collectively worth about 8.1 billion euros ($10 billion) and originate from an era of state-led industrialization.

“It is natural for us as a large owner to have a member in the boards ... This is more of a rule for large owners, we have been an exception,” Makinen told Reuters in his office.

Solidium holds stakes of 5 to 25 percent and Makinen, who took the job last year after working at Nordea Bank NDA.ST, has been proposed as a board member of holding company Sampo SAMPO.HE, pulp and packaging group Stora Enso STERV.HE and engineering firm Metso METSO.HE.

Over time, Solidium plans to have board members in each of its companies, including telecoms carrier Elisa ELISA.HE, chemicals business Kemira KEMIRA.HE and steel companies Outokumpu OUT1V.HE and SSAB SSABa.ST.

“It makes communication easier with the companies. We don’t like to be informed by newspapers on, for example, that the CEO of our company is leaving,” Makinen said, referring to an announcement by Metso last year that its CEO was going after less than a year in the job.

Solidium was founded a decade ago as a bid to distance politicians from the state’s holdings.

But the structure proved unclear, with some politicians complaining over being kept in the dark and some investors wondering whether the state was using its influence.

State-ownership is a sensitive subject in Finland where many think the government should do more to protect Finnish jobs.

Disagreements over how Solidium should be run led to dismissal of its former chairman, and prompted a strategic reform, including the boardroom drive.


Asked if one of Solidium’s aims is to protect Finnish jobs, Makinen said:

“Our priority is that the companies succeed ... There might be discussions concerning what is good for the company and what would be good for a larger interest, but the company’s interest must always come first.”

He referred to a 2014 Finnish-Swedish merger of Rautaruukki and SSAB, which was approved by Solidium and where Helsinki lost a headquarters.

“That proves that we are a rational owner.”

Solidium’s mandate is to own significant Finnish companies with an idea to keep them “more or less Finnish”, he said.

“We like to have some influence, but we don’t want to be autocrats. We can well be the second biggest owner and support the main owner.”

Makinen thinks that a state-owner is still needed in the country.

“Finland does not have very much private capital that could largely own large companies... To be a good anchor investor, one must have the financial muscle to support a company.”

However, not all investors support Solidium’s move.

“The state has adopted a wrong role in the financial market. It is not wise to have the taxpayers taking so much business risk,” Jukka Oksaharju, Equity Strategist at Nordnet bank, said.

Reporting by Jussi Rosendahl; Editing by Alexander Smith