Letter from the CEO
In a constantly changing world, being able to adapt and innovate is crucial for success. The challenges posed today by climate change require real changes to be made by most industries, companies and individuals, as well as by Ferd as an investor.
In 2017 we put sustainability clearly on our agenda, both at the group level and within all our business areas. We now carry out a comprehensive sustainability assessment when making any investment decision. For us, the question concerns not only today’s business models, but also how we as an active owner can help the companies with which we are associated to make good long-term and sustainable decisions. Although meaningful progress has been made, there is room for further development, and we will continue to challenge ourselves in relation to how we can integrate sustainability into all our activities in a more systematic and active way.
The challenges posed today by climate change require real changes to be made by most industries, companies and individuals, as well as by Ferd as an investor.
Ferd achieved robust results in strong markets in 2019, generating a combined return of 12%. I am pleased to report that all our business areas delivered a return in excess of 10%, although just as important is the underlying work and how we as an owner and partner contribute over time to the long-term development of our companies and business areas.
Ferd achieved robust results in strong markets in 2019, generating a combined return of 12%. I am pleased to report that all our business areas delivered a return in excess of 10%.
The privately owned companies in Ferd Capital’s portfolio made good underlying progress. The combined operating profit of these companies grew for the fourth year in a row, and in 2019 exceeded NOK 3 billion for the first time. Fjord Line and Interwell were once again two of the companies that made the biggest contribution to this improvement in earnings. It was also particularly exciting to see Aibel strengthen its position in offshore wind. Mestergruppen continued its journey to becoming one of the leading building materials groups in the Nordic region, and in 2019 it entered the Swedish market through its acquisition of XL-BYGG. We invested in Simployer (previously Infotjenester), a private HR technology company that offers organisations expertise and solutions for managing and developing employees through decision support, HR systems and training. We are looking forward to working with Simployer to help ensure it is even better equipped for growth and development.
Ferd Capital’s investments in listed companies showed a mixed performance. In December 2019 we decided to sell our investment in Scatec Solar with a strong gain following an ownership period of four years during which time the company has grown strongly. Other companies in the portfolio were weaker in 2019, with XXL’s share price falling significantly over the course of the year, for example. We are closely monitoring the demanding period in which the sports industry finds itself in. In 2019 a Ferd representative was appointed to the Board of Directors of the UK listed company Benchmark Holdings, and we are now working actively to develop the company into a leader in fish health.
Ferd Invest delivered a return of 10% in 2019, which is a good performance in absolute terms but significantly below the Nordic benchmark that it aims to outperform. We appointed a new team in 2019 and are really pleased to have attracted two very experienced employees who are a good fit with Ferd. They have developed a new strategy for delivering sound results over time from their investment mandate for Nordic stock markets.
With a combined return of 14% in USD terms, Ferd External Managers performed strongly. The returns achieved by the Global Equity (equity funds and equity hedge funds) and the Global Fund Opportunities (illiquid niche funds) mandates were particularly strong, with both returning over 20%. We increased our exposure to Asia in 2019 with additional investment of NOK 250 million in five equity funds. In addition to broadening our geographic exposure, we will rotate the portfolio going forward toward greater equity capital exposure.
With a number of exciting projects in both residential and commercial real estate, 2019 was an active year for Ferd Real Estate. The return for the year was nearly 18%, which is yet another strong result for the area. Ferd Real Estate has for a long time been clearly focused on sustainability when designing new projects. Examples of this include the focus on green transportation that was adopted for the area’s office building at Brynsveien 14 and our use for the first time of a green financing product for a newly built office building, Asker Tek.
In Ensjø, the project to transform the former industrial area into a residential neighbourhood is in its final stage, and Ferd and its partners have together now built 1,350 homes in Tiedemannsbyen. Going forward, our ambition is to make even more use of Ferd’s position in order to make an even clearer contribution to sustainable urban development. A major opportunity to do just this is the NRK site in Marienlyst, which is a project that received a great deal of attention at Ferd in 2019. Ferd has dedicated considerable effort and resources to this, and we are proud to have been chosen to develop Marienlyst into an even more creative and inclusive district of Oslo. We are looking forward to starting this exciting work and will work hard to ensure that the LYST project becomes a great place to live, work and visit.
We are proud to have been chosen to develop Marienlyst into an even more creative and inclusive district of Oslo.
In 2019 we expanded our focus onto impact investing, which is to say investing in early phase companies and funds with commercial potential that also have a positive impact in terms of the UN’s Sustainable Development Goals. Towards the end of the year we made an exciting platform investment in Antler, a global venture capital fund that specialises in impact start-ups. Going forward, we will make more investments in this segment, either by investing in funds or through other types of partnership, primarily in renewable energy, aquaculture and real estate technology.
In 2019 Ferd Social Entrepreneurs (FSE) celebrated the tenth anniversary of the SosEnt conference, which this time addressed the topic of social impact contracts. Social impact contracts are a new financing model that makes it possible to test out new solutions through collaborations between the public sector, investors and social entrepreneurs, and they are an important tool for social innovation. FSE, Trygg av Natur and Lier Municipality signed an impact contract in 2019 which aims to increase the life skills of lower secondary school students. In 2019 Ferd made a number of equity investments where Ferd’s expertise as an active owner will benefit the social entrepreneurs concerned.
Overall, I am very satisfied with Ferd’s progress. Our 2019 results were robust but in line with expectations given the strength of financial markets last year. What I am particularly pleased to see is the underlying progress made by many of our companies, as well as the ability of Ferd as an organisation to renew itself. We are now stronger and a more future-oriented organisation, we have significant financial capacity, and we are ready to make new investments and to exercise active ownership in our companies in a sustainable way. We are now stronger and a more future-oriented organisation, we have significant financial capacity, and we are ready to make new investments and to exercise active ownership in our companies in a sustainable way.