State juggles its stock portfolio
April 12, 2011
The Norwegian government appears poised to sell off some long-held stakes in key local businesses, while taking part in new share issues at others. A new report that the state may reduce its stake in fish farming firm Cermaq comes just after the trade ministry released a new overall evaluation of its business holdings.
Newspaper Dagens Næringsliv (DN) reported Tuesday that the state has re-categorized its holdings in Cermaq, removing the political reasons for maintaining the state’s stake at today’s 43.5 percent. Cermaq, reports DN, performed far better last year than expected, and now the state intends to maintain its holdings only for business reasons, not because of national reasons like a desire to keep its headquarters in Norway.
Trade Minister Trond Giske confirmed that a sale of Cermaq shares now may be more likely. “We don’t have any concrete plans to sell shares in the company, but the possibility is there,” Giske told DN.
The lack of a national political reason for the state’s stake puts Cermaq in the same category as Scandinavian Airlines (SAS), which Giske has identified as another share sale candidate. In last week’s report on the state’s ownership stakes in various businesses, Giske sought authority to sell off stakes in firms including SAS and real estate giant Entra Eiendom.
At the same time, the state is pondering expansion of its stakes in companies including defense contractor Kongsberg and fertilizer firm Yara International. The state wants to maintain its overall holdings in private business at current levels, but be able to more quickly make changes in its share portfolio.
Giske earlier told DN that he intends to boost staffing within the ministry’s division that evaluates its share holdings, to improve its ability to follow companies more closely. That was among recommendations from consulting firm McKinsey & Co in the report on state ownership.
The state currently has stakes in a long list of companies, and maintains controlling stakes in former state enterprises like Statoil and Telenor. Among its large stakes are the state’s shares in Yara, Aker and Norsk Hydro, and its total holdings in more than 50 companies are valued at around NOK 600 billion (USD 109 billion).
The companies are divided into four main categories that define the state’s goal for its ownership involvement: (1) Purely business reasons, (2) business reasons combined with a desire to maintain the company’s base in Norway, (3) business reasons combined with other specific goals, and (4) political reasons based on the sector in which the company is involved.
In Cermaq’s case, it was moved from category 2 to category 1, making it a more likely sales candidate.
Norway’s stake in SAS, meanwhile, is also likely to be cut although a heavy loss on a sale of the state’s shares at current prices may prompt the state to wait. The Norwegian, Swedish and Danish governments are the largest shareholders in SAS, with a combined stake of around 50 percent.