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Notio: Trading Company Shares by Way of Business |
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Archives -
2007 Archive
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Written by B. Tyril
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Tuesday, 22 May 2007 |
An established player in the Faroese venture capital market with a diversified portfolio, Notio — the country’s first private venture company — is looking to “participate at some level” in the upcoming privatization of government owned corporations.
Its founding in 2002 is widely perceived as one of the key events behind a sea change occurring in the Faroese economy over the past few years. At that point, a venture capital market was practically non-existent; today, it’s a different story.
So this was a change that brought a new attitude to the ownership of securities such as company shares: whereas earlier, the subject of selling a company was almost taboo, such trading, in no time, has become part of everyday business vocabulary.
The Faroe Islands’ first private venture company was founded by the investment banking division of Iceland’s Kaupthing Bank, shortly after it had opened offices here, together with the Faroese Eik Bank and others. Notio, today chiefly owned by Kaupthing and fishing company Framherji’s investment fund Fram Invest, became known as the very symbol of a new financial environment.
“Perhaps it had something to do with timing,” says Notio managing director Kristian Petersen. “Kaupthing had the experience from elsewhere and were able to identify a vacuum here. The market was immature but at the same time the potential was high. For instance, a lot of Faroese companies were in for a change of generation so you had a number of managers and owners that were looking for a successor.”
As the Faroese government is busy preparing to privatize most of its corporations, many expect Notio will seek to purchase a share either of the pension fund and life insurance company Lív, the commercial bank Föroya Banki, or the air carrier Atlantic Airways.
“There’s no denying that these privatizations are of immediate interest to us,” Mr Petersen adds. “We may well participate at some level, but not at any cost. We’ll be closely monitoring the process and then we’ll make our judgment to the best of our ability. It will be based on strictly commercial criteria — that is, we evaluate the company’s potential for profitability in the light of our own return on investment.”
Notio’s initial investment consisted in a 17-percent share in Kall, a telecom operator established in 2001; the share was subsequently sold at a profit, in 2005, to Vodafone Iceland.
One of Notio’s most noticeable moves early on was to purchase the shares of Tórshavnar Skipasmiðja a.k.a. Faroe Yard. Whereas the shipyard is still owned almost entirely by Notio (97.75 percent), the portfolio also includes newly-privatized Faroe Seafood (24.5 percent), Kollafjord Pelagic (24 percent via Faroe Real Estate), Poul Michelsen a.k.a. PM Group (30 percent), Set (33 percent), and Auxilior (18.75 percent).
“Our main purpose and function is to invest in companies with a good potential for sustainable growth and to earn revenues from these investments.
“We have clearly defined requirements for the achievement of profitable operations for all our portfolio companies; for instance, membership on the board of directors is one of our minimum requirements. But we work on a case-to-case basis and where appropriate, we offer coaching. We believe good access to liquid funds is a key ingredient in business development. For most companies, close cooperation with a commercial bank is highly recommendable, and we usually assist our portfolio companies in this area.”
Mr Petersen, who is also a Kaupthing investment banking representative, explains that Notio’s business revenues are of two kinds: dividends from portfolio companies and capital gains from selling portfolio shares.
“We apply different time scales, depending on the nature and needs of the individual investment object. Where necessary, we allow the business to develop its potential and mature sufficiently before we consider selling our share. In other cases, the only reason for not selling at any given time will merely be that we’ll be waiting either for the right buyer or the right price.”
Notio’s area of operation is not confined to the Faroe Islands, Mr Petersen points out. Accordingly, the company is currently involved in an aquaculture startup in Jutland, Denmark.
“We work mostly in the Faroes but do in principle not limit our activities geographically.
“For instance, we have decided to invest in a new aquaculture company in northern Jutland.
“The owners are well experienced in the Faroes, which is partly what their business idea is based on, but it’s a business in Denmark and therefore within the EU and they are going to produce and sell farmed, portion-size trout.”
Link to pdf presentation...
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