Company Directors
The ideal owners for corporate financial performance

The ideal owners for corporate financial performance

A company's ownership structure can impact its financial performance. So who are the ideal owners? Nordea's Thematics team has crunched the numbers in the latest Nordea On Your Mind.

Nordea On Your Mind is the flagship publication of Nordea Investment Banking’s Thematics team, which produces research for large corporate and institutional clients. The research does not contain investment advice and typically covers topics of a strategic and long-term nature, which can affect corporate financial performance.

Top decision makers at Nordea’s large clients across the Nordic region receive Nordea On Your Mind around eight times per year. The publication’s themes vary widely, and many are selected from suggestions by clients. Examples of covered topics include artificial intelligence, wage inflation, M&A, e-commerce, income inequality, ESG, cybersecurity and corporate leverage.

Does a company’s ownership structure affect its financial performance and value creation over time? That’s the question Nordea’s Thematics team set out to explore in their Nordea On Your Mind report, “The ideal owners.”

In their analysis, authors Johan Trocmé, Viktor Sonebäck and Thea Koren distinguish between companies that have a major owner and those that do not. They divide the owners of listed companies into four categories:

  • Institutional investors
  • The state
  • Private equity
  • Strategic entities

The last category includes owners that typically have a long-term strategic agenda, and an involvement or commitment to the businesses that is more than purely financial.

Companies with strategic major owners seem to find the best balance between leverage, investment and being lean, and they have by far the strongest long-term performance in the sample.

Ownership in Europe: The continental versus the Anglo-Saxon model

The Thematics team reviewed all European listed companies with a market cap above EUR 500m. Private equity ownership is small (1%), and state ownership limited (6%), with the bulk split between financial institutions and strategic entities. Continental European companies often have a major strategic owner, while UK companies are most often widely held by financial owners with a greater influence on management, and Nordic companies fall somewhere in between.

Cover Image Noym The Ideal Owners

Nordea On Your Mind report: ‘The Ideal Owners’

Ownership type plays a role in long-term value creation

The analysis of around 2,200 companies shows that companies with institutional major owners are the norm and do not stand out in any major way. State-owned companies invest for the future but demonstrate less capital discipline and underperform over time. Private equity companies have higher leverage and generate superior returns but tend to under-invest and do not outperform in the long term. Companies with strategic major owners seem to find the best balance between leverage, investment and being lean, and they have by far the strongest long-term performance in the sample.

View from the top

To obtain board and group management perspectives, including experiences and reflections on different types of owners and businesses, the Thematics team interviewed Caroline Berg, a fifth-generation family owner representative and chair of the board of Axel Johnson AB, Antti Mäkinen, CEO of Finnish state-ownership vehicle Solidium, and Gunnar Axheim, board member of Swedish state-owned mining group LKAB.

 

Johan Trocmé and Viktor Sonebäck

If you are a corporate client and want to access the full Nordea On Your Mind report, please contact Viktor Sonebäck.

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