Summary of Ferd’s financial results for 2017
Ferd’s value adjusted equity at the close of 2017 was temporarily calculated to be NOK 32.2 billion (NOK 28.8 billion at 31 December 2016). The return for the year was NOK 3.7 billion, equivalent to 13.0%, which is considered a good result for Ferd in 2017.
The return on Ferd Capital’s portfolio was 21.0%. Most of Ferd Capital’s privately held companies increased in value in 2017, the return on this portfolio was 29.7%. Ferd achieved a return of 15.0% on its real estate portfolio. The most important reason for this return was the development of the residential projects. The return on Ferd’s portfolio of Nordic listed companies was 6.2% in 2017. Ferd External Managers reported an aggregate return of 7.7% (in USD terms) on its four investment mandates.
Ferd invested NOK 3.1 billion in 2017. The two largest investments were made in NKT Holding, a Danish listed company, and in Fürst Medisinsk Laboratorium. In autumn 2017 NKT Holding was split into the two companies Nilfisk and NKT. Ferd realised over NOK 800 million from real estate sales in 2017. The sale of an office building in Lysaker near Oslo was the largest disposal carried out by Ferd Real Estate in 2017. Ferd realised NOK 1.5 billion from Invest’s Nordic share portfolio. In total, realisations in 2017 exceeded new investment by NOK 0.6 billion.
At the close of 2017 Ferd had substantial liquidity available – more than NOK 11 billion. Bank deposits totalled NOK 1.3 billion, and the value of Ferd’s listed shares and liquid hedge funds was approximately NOK 10 billion. In addition, Ferd had available an un-drawn loan facility of NOK 6 billion.
Composition of Ferd’s value-adjusted equity (interim figures) at 31 December 2017:
Ferd Capital
Ferd Capital is a long-term investor that has an active ownership role in its portfolio companies during Ferd’s ownership period to ensure the best possible value creation. The business area has three investment mandates: Private companies, Listed companies and Special Investments. Ferd Capital’s largest investments at 31 December 2017 were Elopak, Aibel, Interwell, Mestergruppen, Swix, Fjord Line, Fürst and Servi, as well as its investments in the listed companies PGS, Scatec Solar, Benchmark Holdings, Boozt, NKT, Nilfisk and XXL.
The Ferd Special Investments mandate permits investments in financial instruments relating to most aspects of the corporate capital structure, and these investments are not subject to any requirements in respect of ownership interest or influence. Three new investments were made in the Special Investments portfolio in 2017, and the portfolio comprised of 12 investments in total at the close of the year.
The total value of Ferd Capital’s three portfolios at 31 December 2017 was NOK 18.0 billion (NOK 12.9 billion at 31 December 2016). Almost all the private companies reported a good improvement in profitability in 2017 compared to 2016. Elopak, NKT and Nilfisk, Mestergruppen, Swix, and Interwell were the companies that made the largest contribution to the return achieved in 2017. Ferd Capital’s return for the year, including dividends received from portfolio companies, totalled NOK 3.0 billion.
Allocation of Ferd Capital’s investments between the three mandates at 31 December 2017:
Ferd Invest
Ferd Invest is a financial investor that invests in listed Nordic companies. Its target is to generate a return that is higher than the return on its Nordic benchmark index. Ferd Invest’s mandate does not stipulate limits with regards to the allocation of investments between countries or sectors. The portfolio is concentrated, and is expected to differ significantly in its composition from the benchmark index.
The value of Ferd Invest’s portfolio at 31 December 2017 was NOK 4.0 billion (NOK 5.3 billion at 31 December 2016). NOK 1.5 billion was transferred out of the Ferd Invest portfolio during 2017. Ferd Invest produced a return of NOK 235 million in 2017, equivalent to 6.2%. By comparison with the benchmark index this represented an underperformance of 12.4 percentage points. The largest investments in the portfolio at the close of 2017 were Autoliv, Novo Nordisk, Nokian Renkaat, Norwegian Air Shuttle and Aker Solutions.
Allocation of Ferd Invest’s portfolio between the Nordic stock exchanges at 31 December 2017:
Ferd External Managers
Ferd External Managers has four investment mandates Relative Value, Macro, Global Equity and Global Fund Opportunities. The investment objective for these portfolios is to generate attractive risk-adjusted returns over time, both in absolute terms and relative to their respective markets and indices.
The market value of the Ferd External Managers portfolios was NOK 4.2 billion at 31 December 2017. The portfolios produced a combined return for 2017 of 7.7% (in USD terms). The portfolios are accounted for and managed in US dollars, and the return is accordingly expressed in USD terms. All portfolios produced a good return relative to their respective markets. In absolute terms the best performing portfolio in 2017 was the Global Equity portfolio with a return of 17.6% (in USD terms).
Allocation of the Ferd External Managers portfolio between investment mandates at 31 December 2017:
Ferd Real Estate
Ferd Real Estate is an active real estate investor. The business area develops residential property, new office buildings and warehousing/office combination buildings. Ferd Real Estate carries out projects both independently and in collaboration with selected partners. The business area also carries out purely financial real estate investments. It is also responsible for managing the office premises and warehouse/office combination premises owned by Ferd.
Ferd Real Estate’s value-adjusted equity was NOK 2.6 billion at the close of 2017. The portfolio generated a return of NOK 365 million in 2017, equivalent to 15.0%. The performance achieved in 2017 was primarily the result of progress made with the business area’s residential real estate projects, where several milestones were achieved, as well as the direct return received from commercial rental properties.
Ferd Real Estate’s largest residential development project, Tiedemannsbyen, is in the Ensjø district of Oslo. The project has a total development potential of around 1,600 residential units. A new development stage of this project was launched in 2017.
Allocation of Ferd Real Estate’s portfolio by market segment at 31 December 2017:
Ferd Social Entrepreneurs
Ferd Social Entrepreneurs (FSE) invests in social entrepreneurs that deliver measurable social results, and it contributes to the consolidation of their market. FSE provides these companies with capital, expertise and networks in an active partnership with defined milestones and set social targets. The companies must be focused on achieving a double bottom line, which is to say that they must have a social impact and must also be, or have the potential to be, financially self-sustaining.
An important and major focus for FSE in 2017 was the creation of an accelerator program with social impact for social entrepreneurs, known as Social StartUp. FSE added three new companies to its portfolio in 2017: Atlas Kompetanse, Generasjon M and Gammel Nok. The FSE portfolio now comprises eight social entrepreneurs.
Other Areas
Other Areas principally comprises investments in funds purchased in the secondary market and investments in externally managed private equity funds. The portfolio of funds purchased in the secondary market produced a return of 15.0% in 2017. Ferd received more than NOK 800 million from these two portfolios in 2017. The Other Activities area also includes central group costs and the financial results of the financial instruments held to manage Ferd’s currency exposure.