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‘Frabror Fredrik,’ Sweden’s ‘Warren Buffet’ Fredrik Lundberg Amidst Fierce Competitions

By Pankaj Acharya
Published on: 05:27 PST, Mar 20, 2016

In the Scandinavian country of Sweden where family-controlled businesses own and run a large chunks of the economy, Swedish businessman Fredrik Lundberg, often known as Sweden’s “Warren Buffett”, is facing formidable rivals like the Wallenberg investment empire on several fronts.

Fredrik Lundberg, who inherited the controlling stakes of L E Lundbergföretagen AB in the 1980s — an investment company founded by his father, Lars Erik Lundberg — is one of the leading investors in Sweden, and his firm is bringing in steadily rising returns. Over the past 10 years, they have returned 160 percent to the stakeholders, which is well above Sweden’s index.

With funding from Sweden’s biggest financial dynasty — the Wallenberg investment group — and the Perssons, a new center dedicated to Sweden’s Nobel Prize is planned near his company’s headquarters in Stockholm. Lundberg’s firm has objected to the scale of the proposed building, citing concerns about their sea view and the value of their century-old properties.

The smaller business empires collectively referred to as “systems” are in constant rivalry with “The Wallenberg Sphere” in the Swedish business setting. Industrivarden is one of the largest of systems of which Lundberg became the chairman after building up a total 22.1 percent voting share. Since stepping in as the chairman of Industrivarden, Lundberg began competing directly with the Wallenbergs and the others.

“The Wallenbergs have built over 150 years a contact network across the whole world which they have grown and constantly invested in,” said Ronald Fagerfjall, an author of several books on Swedish business and the Wallenbergs. “Lundberg is standing at the start of that journey, if it is one he wants to take.”

Industrivarden holds controlling stakes in eight high profile listed Swedish companies, firms that employ almost half a million people around the world in everything from banking to telecommunication. Industrivarden’s portfolio includes businesses as diverse as bank Handelsbanken, telecoms group Ericsson, paper company SCA and truckmaker Volvo. Industrivarden and the Wallenbergs both have large stakes in Ericsson.

Analysts are optimistic about Industrivarden’s future, given Lundberg’s good track records over the past 10 years.

Speculations were stirring in Swedish media about Lundberg’s intentions to merge Industrivarden with his own firm which he denies. “The different portfolio companies have their respective agendas and don’t have anything to do with one another,” Lundberg said. “What we are doing is capital management.”

“We get from Lundbergforetagen’s perspective a diversification of our assets in big companies which we wouldn’t have been able to do on our own directly,” he added. “One can say that Lundbergs and Industrivarden complement each other.”

Amidst the speculations, Swedish business daily Dagens Industri reported this month “Industrivarden could sell its share in Ericsson,” one of its original holdings, or trim its share of Handelsbanken. Banking sources say SCA could spin off its forestry assets and Volvo could sell its construction business. New CEOs in Sandvik, mining equipment maker and Volvo from within the Wallenberg sphere are driving changes in the struggling companies.

Industrivarden has already told Ericsson to improve profitability in several of its businesses. The Wallenbergs-backed Investor Group is the largest stakeholder of Ericsson.

“I think we will also look into divestments if the opportunity looks right,” said Helena Stjernholm, the new chief executive of Industrivarden. She declined to offer details but suggested that they will not hold companies “forever.”

After reports of last years’ corporate jets scandals in SCA surrounding Industrivarden executives, the other stakeholder Investor wants activism. Industrivarden holds the largest, 10 percent, stake in SCA.

[Image via va.se]

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