Solidium's operating model
In-depth analysis to form the owner’s strategic view
Solidium’s operating model as an active minority shareholder requires considerable effort to understand the portfolio companies and their industries. We familiarise ourselves thoroughly with the situation of each portfolio company and its industry in order to form a view of the strategic issues central to shareholder value. Forming a strategic view as an owner of each company is a key task of Solidium’s Board of Directors.
In accordance with its mandate, Solidium primarily invests in companies of national importance listed on the Helsinki Stock Exchange. We may also invest in companies preparing for listing and companies listed on other stock exchanges but with considerable operations in Finland. We invest in companies in which we can acquire sufficient ownership and influence for developing and implementing value creation plans. We are a long-term owner, and our mandate excludes short-term trading.
In order to reach our objectives as an owner, Solidium maintains regular contacts with the board of directors, managing director and other management of each portfolio company. Regular discussions with the chairmen of the portfolio companies’ boards are our most direct channel of influencing and one of the most effective methods for us as an owner to develop the companies. Although Solidium’s operations are subject to considerable expectations regarding transparency, we do not publicly report about our discussions with the boards and management of portfolio companies, as these discussions can only be held in confidence.
In-depth analysis of the portfolio companies is crucial, given the objectives of our operations, the considerable size of the investments, as well as the investment horizon, which is significantly longer than that of a portfolio investor. Solidium’s corporate analysis covers the company’s business model and strategy, competitive advantage and position, market environment, and governance, among others. We use this analysis as a basis for our view on the company’s operative and financial development, value, national importance, and corporate responsibility matters which potentially affect shareholder value.
Solidium’s Board of Directors makes the investment decisions
Solidium’s mission is not only to maintain assets but also to decrease or increase the holdings, divest them as well as buy new shares in listed companies considered important for society. Therefore, it is important that Solidium has the resources needed to renew its holdings by investing also in new companies.
Solidium follows companies, which are a potential match with its investment strategy. This enables us to stay up to date on the development of the interesting companies and single out the potential ones for a more detailed analysis in preparation of a possible investment. In the more detailed analysis we determine whether the company in question meets our investment criteria.
At the analysis stage, the potential investments undergo an examination similar to the one used for Solidium’s portfolio companies. When assessing investments, aspects that are taken into consideration include the market outlook in general as well as with regard to the company in question, the communication and publicity perspectives related to increase of the holding, the management of the counterparty risk as well as the total economic value of making the acquisition.
The investment decision is made by Solidium’s Board of Directors. Typically not all investment processes result in an investment decision, for a variety of reasons, and thus they remain non-public.