(Bloomberg) -- As Swedish manufacturers such as Ericsson AB, Sandvik AB and ABB Ltd. review their operations, private-equity firm PAI Partners SAS is positioning itself to snap up non-core assets.
Such strategic re-modelings, which are coinciding with new ownership structures at some of Sweden’s biggest companies, are creating opportunities for companies like PAI Partners, according to Ragnar Hellenius, who oversees its Nordic operations.
“Public owners of large companies are increasingly challenging why companies should keep non-core business units, and this is creating opportunities for us," Hellenius said in a phone interview on Sept. 30. The question is whether there are “things here that could have a different growth trajectory in a stand-alone situation,” he said.
As some of Sweden’s biggest corporations resort to job cuts, executives are also taking a close look at their non-core assets in an effort to boost profits. Ericsson on Tuesday said it will cut 3,000 jobs and reduce manufacturing in Sweden. Sandvik, which is evaluating the divestment of some units, this year sold its Mining Systems operations to private-equity firm CoBe Capital. Svenska Cellulosa AB will seek shareholder approval to split into two listed companies spanning hygiene goods and forestry products.
ABB on Tuesday said it decided to keep its power-grids operations after completing a review of the unit. The company, which had been under pressure from activist shareholder Cevian Capital AB to spin off the unit, said last month it would slim down the business by selling some operations to NKT Cables.
With ownership structures getting shaken up in Sweden, some of the remaining shareholders may be more inclined to insist on their companies offloading assets.
Industrivaerden AB, which holds major stakes in Ericsson, Sandvik, Volvo AB, SCA and SSAB, last year named Helena Stjernholm as its new chief executive officer. Since then, the web of cross ownership among those companies has largely unraveled, with Svenska Handelsbanken AB selling its stakes in SCA and Industrivaerden, and SCA selling its shareholding in Industrivaerden.
“Just putting the light on a smaller business unit within a large corporate that hasn’t got 100 percent attention because there are other businesses that the CEO and owners need to support, usually has tremendous value," Hellenius said. “It enables smaller parts to grow if it hasn’t been part of the core strategy and I think that’s what many owners are looking for today.”
As it sounds out the market, PAI has engaged advisers that have previously been employed by large Swedish companies to get a better understanding of how the business really works, Hellenius said. The firm also sees “a healthy pipeline” of so-called secondary investments -- companies owned by other private-equity firms that can be further developed and internationalized by a new owner, he said. Atos Medical AB and Safegate are among companies it has bought and helped expand globally.
Perstorp is another example of a company with ambitions for international growth. The Swedish maker of chemicals and additives plans to refinance about 12 billion kronor ($1.4 billion) of debt to improve terms and extend maturity dates, according to people with knowledge of the matter.
“The Nordic financing market has changed from mostly club deals among the largest banks to a model where all sources of financing are available, including institutional lenders and high yield bonds," Hellenius said. “Because of this competition, companies and their financial sponsors are able to get competitive terms and sometimes fewer covenants, which increases flexibility.”
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