Significant events in the full year 2016 and the fourth quarter
- Profit/loss after tax for the year was SEK 142.6 million (-48.6) including unrealized profit/loss from portfolio companies of SEK 8.9 million (-51.7) and realized profit/loss from portfolio companies of SEK 197.9 million (69.6). Restructuring costs of SEK 19.6 million are included in profit for the year. Profit/loss after tax for the quarter was SEK 177.2 million (124.5) including unrealized profit/loss from portfolio companies of SEK 35.2 million (153.1).
- In the year, Fouriertransform invested a total of SEK 158.3 million, of which SEK 24.0 million in a new company; re:newcell AB in Kristinehamn and SEK 134.3 million in 14 existing portfolio companies.
- Three portfolio companies were listed on Nasdaq First North in the year. All new issues were heavily oversubscribed by institutional investors and members of the public:
- o Alelion Batteries raised some SEK 103 million in June
- o SmartEye raised some SEK 80 million in December
- o ÅAC Microtec raised some SEK 120 million in December
- In September, US company Luxoft, listed on the New York Stock Exchange, acquired all the shares in Fouriertransform’s portfolio company Pelagicore in Gothenburg. The divestment generated good returns for Fouriertransform.
- In December, Indian company Tata AutoComp acquired all the shares in Fouriertransform’s portfolio company TitanX in Gothenburg. The divestment generated good returns for Fouriertransform.
- Since inception in 2009, Fouriertransform has invested a total of SEK 1,746 million in 29 companies in the Swedish automotive and manufacturing industry.
- The market value of the 21 existing portfolio companies, including capital gains/losses on divestments and amortized capital from portfolio companies, corresponds to value growth of some 14% on total capital invested since operations began.
- Fouriertransform’s owner, the Swedish government, has provided SEK 3,000 million in capital since inception, and received SEK 100 million in dividends in 2015. Fouriertransform’s equity was SEK 3,186 million as of December 31, 2016, corresponding to a value increase of some 10% on the capital provided.
- Total cash flow for the year was SEK 114.7 million (15.8), of which investments in new and existing portfolio companies was SEK -171.6 million (-220.0).
- Cash and cash equivalents and investments in securities at year end were SEK 1,823 million (1,786).
- Since January 1, 2017, Fouriertransform is an administrative organization and a subsidiary of recently established government-owned company Saminvest. Fouriertransform will continue the responsible value management of its 21 existing portfolio companies until exit.
CEO’s comment – a portfolio exuding optimism
After eight business years Fouriertransform is now entering a new phase as a result of the reorganization of Sweden’s government-sponsored venture capital. Our portfolio holdings returned value growth last year, evidencing the importance of taking a long-term view, and that it’s possible to use competence and capital to boost Swedish manufacturing even in a tough business climate.
The Swedish manufacturing industry faced some tough challenges following the financial crisis in 2008-2009. Automotive industry operators in western Sweden were particularly affected. Many saw order levels almost disappear, with staff facing very bleak prospects - in some cases, two members of the same family faced redundancy at short notice.
This critical situation led the Swedish government to establish Fouriertransform to provide venture capital as a complement to other funding sources for promising businesses and projects with growth potential. After eight business years, we can now see that our long-term efforts have paid off.
Owners like Fouriertransform were needed to ensure business growth, new recruitments and maintaining Sweden’s strong manufacturing industry. We’ve supported innovation and expansion on new markets and have provided valuable contacts through our industrial network and amongst other investors.
Positive value growth
Since inception in 2009, Fouriertransform has acted as a complementary owner of a total of 28 companies, mainly active in the manufacturing and automotive industries. The portfolio has also included medtech, IT and telecom companies in recent years. The value growth of our portfolio companies demonstrates that Swedish industry can be strengthened through long term and active collaboration between state-sponsored and private ownership capital. This is also evidenced by sustained significant interest in our investments.
In addition to follow-on investments in 14 portfolio companies in 2016, intended to support their continued expansion in Sweden and internationally, Fouriertransform also completed a number of important transactions. One example of Fouriertransform’s complementary role in supporting a promising Swedish automotive industry operator is provided by Titan X, which was sold to Indian company Tata AutoComp Systems Limited, a part of the Tata Group. For start-up project Pelagicore, active in the infotainment segment of the automotive industry, Fouriertransform successfully provided the right competence and ensured survival of the company. Pelagicore was sold to global operator Luxoft of the US in the year. The final major transaction last year was an investment in recycling company re:newcell. Fouriertransform is contributing to the construction of the world’s first production line for textile pulp derived from recycled textiles in Kristinehamn, Sweden.
Five of Fouriertransform’s portfolio companies have been listed on the stock market over the last three years, all on Nasdaq First North. First out was fuel cell manufacturer PowerCell, followed by medtech company SciBase, which has developed a unique method for detecting malignant melanoma. Technology player Alelion Batteries followed suit in June 2016, with a heavily oversubscribed new issue. This company develops, manufactures and markets complete energy storage systems based on lithium ion technology. Smart Eye, which develops and markets eyetracking systems was listed at the beginning of December, eight times oversubscribed. Fouriertransform’s fifth portfolio company, ÅAC Microtec, headed for the stock market just before Christmas. The company develops high tech components for small satellites, a market where considerable growth is predicted over the coming years.
Fouriertransform enters a new phase
As a result of the government’s decision to reorganize Sweden’s state-sponsored venture capital, Fouriertransform has entered a new phase after eight business years, and has been an administrative organization and a subsidiary of newly established company Saminvest since the end of last year.
Despite the challenging climate, we’ve succeeded in keeping the portfolio companies and secured the technology cluster in Trollhättan. We’ve taken over and worked with businesses and projects the automotive industry was unable to support, and have contributed to creating the competitive climate and employment prospects Sweden needs.
The portfolio companies are now starting to return positive results after five to six years, and interest in them has never been greater. The portfolio exudes optimism and Fouriertransform’s task over the next few years will be to continue to manage these companies with the same diligent care we’ve always shown.