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Icelanders buying up businesses

Seeing steady growth, investors flock to Europe's heartland

By Michael Heitmann
Staff Writer, The Prague Post
April 16th, 2008 issue

Heating up



Icelandic firms have bought stakes in several local companies in the past year:
Hamé Nordic Partners finalized its purchase of the country's largest canned-food producer in a deal estimated at 5 billion Kč. The firm has also taken over the meat processor Otomac
Wood & Company Straumur, Iceland's largest investment bank, bought a 50 percent stake in the prominent Prague-based brokerage in late 2007
Travel Service Icelandair took over the operator of the budget airline SmartWings at the end of the year

Known for its rugged natural beauty and churning geology, Iceland may give the impression of an idyllic backwater in the North Atlantic. But, surprisingly, the island state sports an impressive wealth, with its gross domestic product rising from $30,000 (479,400 Kč) to more than $50,000 per person in the past eight years.
Iceland clearly needs somewhere to invest all this cash and, in a surge of acquisition activity, Icelandic entrepreneurs have scoured the Czech Republic, looking for businesses to snap up. They’ve bought companies in a wide sweep of sectors, from canned food to stockbrokers to airlines.
The Czech Republic is strategically located in the center of Europe with easy access to attractive markets, said Gunnar Leo Gunnarsson, chairman of the investment firm Nordic Partners, which draws 90 percent of its funds from Iceland and 10 percent from Latvia.
“The stability and growth prospects of the economy are in line with our needs to grow,” he added.
Nordic Partners finalized its takeover of the country’s largest canned food producer, Hamé, April 4. The price of the deal has not been disclosed, but is estimated to be at least 5 billion Kč. In addition to Hamé, Nordic Partners has also acquired the Czech meat processor Otomac.
Hamé creates a foundation for growth in the Central and Eastern European markets, and the company’s operations will continue to expand, Gunnarsson said. It’s too early to comment on specific plans, he added.
Hamé’s Otma-brand ketchup, paté, canned foods, jams and baguettes can be found throughout the region. It has subsidiaries in Romania, Hungary, Russia, Poland, Ukraine, and Slovakia and exports to 30 additional countries including Cuba, Libya and Japan. Sales totaled nearly 5 billion Kč last year.
Nordic Partners’ move into the market comes on the heels of two other landmark acquisitions: Straumur, Iceland’s largest investment bank, secured a 50 percent stake in the brokerage Wood & Company in October 2007; a month later, Icelandair bought Travel Service, the country’s largest private airline.
None of these investments reach the dimensions of a deal in 2006 by Thor Bjorgolfsson, who sold his 70 percent stake in České Radiokomunikace to private equity investors for 1.19 billion euros, prompting Forbes to declare him Iceland’s first billionaire.
Bjorgolfsson, chairman of Straumur, still keeps his eyes on the Czech market.
Let them eat fish
There were 29 Icelanders living on Czech soil as of Feb. 29, according to the Interior Ministry. Thorir Gunnarsson, Iceland’s honorary consul general in Prague, confirmed that his countrymen run a number of hotels, including the Italian-style Bellagio in Old Town, a software company and a chain of Vera Moda fashion stores, a Danish brand. Consul Gunnarsson himself owns Prague’s only Icelandic restaurant, the Reykjavík, near Charles Bridge.
When he came here in 1991, most Icelanders never even thought about going abroad, Consul Gunnarsson said. “When I saw how people lived here, I thought, ‘They have to start eating fish.’ ”
With only 316,000 fellow countrymen, Icelanders are bound to move in small circles. In fact, Consul Gunnarsson recalls how Nordic Partners’ Gunnarsson came to visit him in 1994. The latter ended up in Riga, Latvia, however, where he bought an old factory hall and invited Icelandic companies to set up a subsidiary there. Juice and chocolate makers followed his call.
The two Gunnarssons met again last year, when Nordic Partners was exploring the Hamé acquisition, though then the company did not want word to leak, Consul Gunnarsson said. In his personal opinion, he expects Nordic Partners will keep the same management at Hamé while modernizing the manufacturing process.
“When you see what you can buy in the United Kingdom as ready to eat food, this will be available here too,” he added.
Caviar origins
There’s yet another Iceland deal still awaiting approval from the Anti-Monopoly Office. Bakkavör Food Limited wants to buy Brno-based Heli Food, a producer of ready-to-eat meals. It holds a 51 percent stake in Heli Food Fresh, and plans to take over the remaining 49 percent in April 2010.
Bakkavör started its business in a garage 20 years ago, when its founders bought caviar tins and shunted their content into even smaller tins, Consul Gunnarsson said. The group’s 2007 turnover reached £1.5 billion ($2.95 billion/46.7 billion Kč).
Coming from a small country becomes an advantage in Prague. People are always friendly to Icelanders, because they think that small countries should stick together, said Consul Gunnarsson.
This burst of entrepreneurship shouldn’t be seen as unexpected, as Iceland’s small size and remoteness have left a mark on its inhabitants: There used to be hard work on fish trawlers and volcanoes exploding at whim. Icelanders are always ready for the unexpected and fast at making decisions, Consul Gunnarsson said.

Michael Heitmann can be reached at mheitmann@praguepost.com


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