The British investment fund that bought up 90 percent of the shares in Norway’s famed coastal shipping line Hurtigruten may see the value of its stake double if it succeeds in finding new buyers. That means the fund’s partners and investors could profit handsomely on a company that received more than NOK 800 million in state subsidy last year alone.
“The (operating) results for Hurtigruten the past two years have been fantastically good,” Norwegian investor Petter Stordalen, who owns 5 percent of Hurtigruten’s stock, told newspaper Dagens Næringsliv (DN) on Thursday. He said the strong results have increased interest in the company, which reported an 18.3 percent increase in operating revenues and a 90.5 percent increase in operating profits last year. The company nonetheless logged a pre-tax loss because of large one-time charges tied to the acquisition and refinancing of the company in 2014.
Stordalen insisted, however, that majority owner TDR Capital, which acquired its 90 percent stake in Hurtigruten less than two years ago, has no plans to completely sell out of what’s evolved into a unique cruise line along Norway’s scenic coast that also carries some cargo in addition to passengers. Stordalen, best known in Norway for his hotel investments, thinks it’s more likely that additional investors will buy into the company.
“I experience all the time that there’s great interest in Hurtigruten,” Stordalen told DN. “We’re a little club of three owners now and agree that all of us will remain. There are surely others who want to sail along on the journey before us.”
He said, after the Bloomberg news service had reported TDR Capital’s pending sale of Hurtigruten, that no offers have come in for the shipping and tourism company. “I think I would know whether anything has happened of material character,” Stordalen told DN.
Stordalen’s fellow Norwegian investor, Trygve Hegnar’s Periscopus AS, declined to respond to DN‘s request for comment. Nor would Jonathan Rosen, a partner in TDR Capital who had hailed Hurtigruten and its prospects from the deck of one of its vessels after a voyage along the coast. “There is nothing more attractive and unique within the travel sector than the Norwegian coast,” he told news bureau NTB in connecton with TDR Capital’s acquisition in 2014. TDR officials had also claimed they would be long-term investors in the company and invest in its growth.
A pending sale less than two years later thus raises questions that Hurtigruten’s investors are merely seeking quick profits, which Stordalen attempted to downplay. Bloomberg reported that Hurtigruten can now be worth between 12- and 14 times its adjusted operating result before writedowns (Ebitda), which amounted to NOK 923 million in 2015, up from NOK 652 million the year before. Earnings have improved this year, meaning a sale could value the company at NOK 12 billion or more. It was valued at around NOK 5.7 billion including debt during the sale process to TDR Capital. Gains would be offset by investments made in Hurtigruten since.
The Hurtigruten line has enjoyed rising passenger demand in recent years, as Norway has emerged as an attractive tourist destination all year round. Hurtigruten was quick to latch onto the growing interest in seeing the Northern Lights, which have become nearly as strong as the Midnight Sun in the summer as a magnet for tourists.
This year and last have also seen a big jump in tourism overall in Norway, because of the country’s weaker krone, while Hurtigruten management has also boosted efficiency that has improved profitability. Vessels have been upgraded substantially and the company placed its biggest vessel order ever this past spring.
“If it hadn’t been for my romance with my hotels, I would have invested even more in Hurtigruten,” Stordalen told DN. The line currently has 11 vessels, nine of them built after 1993, that regularly call at 34 ports along the coast all year long. Hurtigruten also operates explorer cruises to Greenland, the Antarctic, Svalbard and various other locations through the year.