Invalda strategy to unleash hidden value

  • 2013-12-18
  • From wire report

BREAK-UP: Invalda hopes the sum of its parts are greater than the whole

VILNIUS - Invalda LT, one of Lithuania’s major investment companies, is planning to establish a management company in its drive to become one of the leading private equity, real estate, investment and pension funds management companies in the region, reports ELTA.

“We are focused on asset and business management. Since 1991, we have been successfully managing our shareholders’ funds and have gained substantial experience in the acquisitions, reorganizations management and disposal of companies. We have a team and necessary resources that, combined with the market and private capital sector growth, allows us to expect success,” said Darius Sulnis, president of the company.

According to Sulnis, after the approval by shareholders, three to four companies which manage homogeneous assets and which are planning to separate from Invalda LT will be applying for closed-end investment company licenses. It is assumed that they will be applying for the strictest regulatory regime which is imposed on retail investors.

“All the Invalda LT shareholders (over 4,200) will proportionally own shares in the separated companies. All the shares of these newly established companies are planned to be quoted on the NASDAQ OMX Vilnius Exchange,” says Sulnis.
“Preliminarily, the first few investment companies will operate in the agricultural land sector, real estate sector and IT sector. It is expected that after receiving their licenses, and evaluating the investment environment, all these companies will raise additional capital. We also expect to establish new private capital funds,” Sulnis said.

One of the main reasons behind the reorganization is that the firm’s capitalization, the company says, is usually lower than the total value of the separate assets because investors cannot predict sectors where investments will be made.
The reorganization will allow investors to select the asset or business in which they would like to invest. “The investors will be able to select the sector, the risk level as well as the term of the investments. By licensing the activities and being under the supervision of the Bank of Lithuania, there will be an increase in transparency and reduction in investment risk,” believes Sulnis.

According to the company’s president, the new capital raised will allow the firm to implement larger projects.
The agricultural investment company will be created on the basis of 17 companies (altogether they own about 2,900 hectares of land) owned by Invalda LT. “We think that the agricultural land in Lithuania is one of the most undervalued in Europe. Long farming traditions and increased efficiency allows for the expectation of increased land prices,” said Sulnis.
The real estate investment company should be created on the basis of the currently operating Invaldos Nekilnojamojo Turto Fondas. At present Invalda LT owns real estate in Vilnius and Kaunas with a total area of 50,000 square meters.
“We think that the recovery of the economy will increase the real estate prices, which shrank due to the crisis. Also, we expect to create value investing into readjustment and development of owned real estate, and acquiring new ones,” said Sulnis.

The first investment of the IT investment company would be in 80 percent of shares in BAIP Group. This group currently owns companies in Lithuania, Norway and Tanzania. Moreover, it has implemented projects in more than 50 countries.
“Lithuania is an exporter of IT services. Many start-up and mature company business models are suitable for international markets and show growth of value,” said Sulnis.

Invalda LT will concentrate on asset management and will seek to receive its main income from management activity. The other step could be a separation of the remaining assets. On this basis a new private equity investment company could be established, or the remaining assets could be sold. Money generated by assets in Invalda LT would be used as the primary capital in establishing funds.