Brim buys 10.83% of Iceland Seafood International

Golli. A Brim ship in Akranes, West Iceland

Icelandic seafood company Brim has bought a 10.83% share in Iceland Seafood International (ISI), RÚV reports. The purchase entails the entire share of Bjarni Ármannsson’s company Sjávarsýn in ISI. Bjarni is also the CEO of Iceland Seafood but is resigning from the position.

Even prior to the sale, Brim was one of Iceland’s largest and most profitable seafood companies. With this purchase, the company intends to strengthen its sales network in Europe. The sale was announced to the stock exchange last night, as both Brim and Iceland Seafood are listed on Nasdaq Iceland’s main market. Brim paid over ISK 1.6 billion [$11.7 million, €11 million] for the shares.

Sold for one thousand pounds after losses

Iceland Seafood has faced difficulties in operations recently. The company sustained considerable losses in the operations of its subsidiary Iceland Seafood UK, which was eventually sold to the Danish company Espersen for the small sum of one thousand pounds. Iceland Seafood’s loss in the first half of the year amounted to ISK 2.2 billion [$16 million, €15.1 million].

The share price in Iceland Seafood last weekend stood at ISK 5.3 [$0.04, €0.04] per share and had never been lower since the company went public four years ago. The price rose by 4.72% at the opening of the market this morning in a transaction worth ISK 22 million [$160,000, €151,000].

Brim to strengthen sales network

Iceland Seafood is one of the main exporters of seafood in Iceland and operates offices in seven countries in Europe, North America, and South America. According to Brim’s CEO Guðmundur Kristjánsson, this is exactly what Brim is looking for with the purchase. The goal is to strengthen Brim’s sales network, especially with regard to markets in Europe.

Bjarni Ármannsson will step down as Iceland Seafood’s CEO and will be replaced by Ægir Páll Friðbertsson, managing director of Brim.

43% of Iceland’s exported goods

The Icelandic seafood industry is one of the country’s key industries, employing around 7,500 people or approximately 3.9% of the workforce. The seafood industry contributes around 8% directly to Iceland’s GDP, but its indirect contributions are much greater. Marine products account for 43% of the value of Iceland’s exported goods.

Consolidated wealth

Just four companies hold around 60% of Iceland’s fishing quota: Samherji, Brim, KS, and Ísfélagið. In 2021, Brim reported profits of ISK 11.3 billion [$88.8 million; €82.9 million].

In a column published in Morgunblaðið last year, Minister of Fisheries Svandís Svavarsdóttir stated that the nation viewed the consolidation of fishing quota in so few hands as deeply unjust and that it felt that this collective resource was not distributed fairly.

Opposition MP and former Social-Democratic Alliance Chairman Logi Einarsson pointed out that the wealth in the fishing industry was leading to accumulated assets in unrelated sectors, such as the media, real estate, transport, grocery stores, energy, and even insurance and banking.

State Sells 22.5% Stake in Íslandsbanki

Prime Minister Bjarni Benediktsson

The Icelandic government sold a 22.5% stake in Íslandsbanki bank last Tuesday in an offering for professional investors. Opposition MPs have criticised the shares’ low price and the sale’s lack of transparency. Finance Minister Bjarni Benediktsson says the aim was to acquire long-term investors and that Icelandic pension funds were the main purchasers.

Íslandsbanki was fully owned by the Icelandic state until last year, when it sold a 35% stake in the bank, something that had been on the government agenda for years. While last year’s sale was a public offering, this week’s was only open to professional investors, who received an invitation to buy shares, which were then sold at a 5% discount from their market value. The sale was successful, reducing the government’s stake in the bank from 65% to 42.5%.

Investors received insider information

According to information from Icelandic State Financial Investments (ISFI), demand for the shares was high. Both Icelandic and foreign investors showed interest in the sale, though the identity of the investors has not been made public. Investors were required to sign a confidentiality agreement, meaning they were temporarily granted access to inside information. Investors had already made a profit yesterday, when shares in the bank rose by ISK 4-5 billion [$31.1-38.9 million; €28.3-35.4 million] following the sale.

MPs criticised the sale’s lack of transparency in Parliament yesterday, as well as the discount given to investors. Financial expert Ásgeir Brynjar Torfason told RÚV it is unclear how the investors were selected, and that is a question that ISFI and the Ministry of Finance need to answer. He also called on authorities to answer why such a large discount was given, despite high demand for the shares.

Finance Minister responds to criticism

In an interview with RÚV, Minister of Finance Bjarni Benediktsson called the discount on the shares a small one, saying that Icelandic pension funds were the main purchasers in the offering. “We did not go the route of looking for the pension fund or the investor who wanted to offer the highest price and let them have as much as they wanted. We took another route. We wanted to go toward more decentralised ownership and we wanted to consider what the market conditions would be like when the offering ended. That there would be a [financially] healthy group behind the bank.”

Stocks Tumble, Gasoline Soars

icelandair757

Iceland has not been immune to the economic effects of the Russian invasion of Ukraine. Gasoline prices rose to ISK 303 ($2.27; €2.06) per litre around the country this morning, while diesel prices also surpassed ISK 300 per litre. Nasdaq Iceland’s index has dropped 12% since the invasion began, with the value of Icelandair stocks dropping by 32%. This drop has entirely erased the stock exchange’s steady gains over the past year.

Nasdaq Iceland’s selected share index hit a low in March 2020 at the beginning of the COVID-19 pandemic. It rose gradually from that date, until reaching a high point last September, RÚV reports. The day the Russian invasion began, the selected share index dropped by 6%. The stock index remains significantly higher than it was in March 2020, but its gains over the past year have been fully erased.

Íslandsbánki’s Chief Economist Jón Bjarki Bentsson outlined the three main factors causing stock prices to fall in Iceland. Firstly, the uncertainty created by the Russian invasion of Ukraine has pushed investors to opt for less volatile assets. Secondly, rising energy and raw material prices impact the operations of companies that depend on those resources. Thirdly, the uncertain economic outlook on a global level may impact how well Iceland’s tourism industry bounces back from the pandemic and how many people travel to Iceland in the near future. This last factor impacts companies such as Icelandair significantly.

Rúnólfur Ólafsson, CEO of the Icelandic Automobile Association, has pointed out that rising gas prices impact often impact those who are the most disadvantaged, as well as impacting the cost of transporting goods and the cost of snow removal for municipalities. He called on the government to temporarily lower taxes on gasoline in order to mitigate the impact.

24,000 Shareholders in Íslandsbanki Following Successful Stock Offering

Íslandsbanki bank’s shareholders now number around 24,000 following a share offering that ended yesterday, more than any other company listed on Nasdaq Iceland. The bank remains 65% in state ownership, with 24% now in the hands of domestic investors and 11% held by foreign investors. Finance Minister Bjarni Benediktsson celebrated the campaign’s success, stating that it reduced state risk and provided funds for upcoming development projects.

“It’s gratifying to see the results of Íslandsbanki’s successful offering,” Bjarni stated. “High demand and participation from the public is particularly gratifying, and Íslandsbanki will have more shareholders than any companies registered on the Icelandic market. This is not least due to the decision to allow subscriptions for as little as ISK 50,000 [$512/€340] and leave individual subscriptions of up to one million krónur [$8,250/€6,800] intact. The sale is profitable for the treasury and will be useful in the development that lies ahead in the coming months. Most importantly, however, we are taking the first step here in reducing the state’s risk in banking and moving closer to a healthier environment as is the case in the Nordic countries and our other neighbouring countries.”

Read More: Sale of State-Owned Banks

One of Iceland’s three largest banks, Íslandsbanki was 100% in state ownership before the share offering. Of the other two, Arion Bank is privately owned and Landsbankinn is 98.2% state-owned. Iceland’s current governing coalition prioritised reducing state ownership of financial institutions in the government agreement made at the beginning of its term.

Up to 35% of State-Owned Íslandsbanki For Sale

Icelandic state-owned bank Íslandsbanki launched its share offering at 9.00am this morning. The bank will sell up to 35% of its share capital in the initiative, which stands until June 15, following which all its shares will be listed on Nasdaq Iceland (the Icelandic stock exchange). Two foreign investment companies and two local pension funds are said to be the cornerstone investors in the initiative. RÚV reported first.

Government Moves to Reduce State Ownership

Of Iceland’s three largest banks, just one (Arion Bank) is privately owned. The other two are in state ownership (Íslandsbanki, currently at 100% and Landsbankinn at 98.2% state ownership). Iceland’s current governing coalition prioritised reducing state ownership of financial institutions in the government agreement made at the beginning of its term. A sale of part of Íslandsbanki was discussed earlier in the term but side-lined during the pandemic as conditions for the sale were not considered favourable. Government officials have argued that the sale could free up funds for investment in essential infrastructure.

Read More: Sale of State-Owned Banks

A notice on Íslandsbanki’s website states that the bank’s estimated market value following the offering is ISK 150 billion ($1.24 billion/€1 billion). The aim is to sell over 636 million shares, the suggested retail price of which is between ISK 71 and 79 per share. The offering will take place both through a public offering of shares to institutional investors and retail investors in Iceland and through a private placement to specific institutional investors in various other jurisdictions.

Four Key Investors

Foreign investment funds have already committed to buying in the bank, according to Íslandsbanki. Funds managed by Capital World Investors have committed to purchasing nearly 77 million shares while RWC Asset Management LLP has committed to purchasing nearly 31 million shares. Icelandic pension funds Gildi-lífeyrissjóður and Lífeyrissjóður verzlunarmanna have also committed to buying more than 46 million shares each. These four parties are said to be the cornerstone investors in the offering.

Nasdaq Central Securities Depository in Iceland Merges with Nasdaq CSD

Nasdaq central securities depository in Iceland has merged with Nasdaq CSD, which will now operate in Iceland, Lithuania, Latvia, and Estonia, RÚV reports. An announcement about the merger states that in its wake, Icelandic operations will be able to make full use of the opportunities and connections that Nasdaq CSD’s securities depository system has to offer, thus creating new opportunities for both domestic and foreign customers.

“This is both the biggest infrastructure change as well as technological advancement that has taken place in the Icelandic securities market for 20 years and will allow us to participate in innovation and development in this branch that will deliver to our clients,” stated Magnús Kristinn Ásgeirsson, CEO of Nasdaq CSD in Iceland. It is expected that the technical part of the merger – the introduction of a new central securities depository system – will be completed on 15 June.

In 2017, Nasdaq CSD became the first European securities depository to obtain operating licenses under the new European Central Securities Depository Regulation (CSDR), and was recently granted a licence to operate in Iceland according to that regulation. Nasdaq CSD has integrated the operations of Nasdaq Securities Centre in Iceland with Nasdaq CSD in accordance with CSDR’s requirements for governance and operations, with a view to ensuring more secure and efficient settlement services in the Icelandic securities market in accordance with international standards.

Icelandair Aims to Raise ISK 29 Billion Through Public Stock Offering

icelandair757

Icelandair hopes to raise up to USD 200 million [ISK 29 billion; €1.82 million] in equity through a public stock offering in June. The company’s board of directors announced their intentions, which they say is “an important part of the financial restructuring of Icelandair Group,” in a statement sent to the Icelandic Stock market on Thursday night.

If approved at the company’s shareholders’ meeting in May, the stock offering would “enable the Board to increase the share capital of the Company by up to 30,000 million new shares,” reads the statement. “The Board further proposes that current shareholders waive their pre-emptive rights to the new shares. The public, along with other investors, will thereby be given the opportunity to subscribe to new shares in the Company. Furthermore, the Board will have unilateral authority to determine the allocation of new shares, but efforts will made to provide full allotment to existing shareholders and employees.”

See Also: Icelandair Lays Off Record 2,000 Employees

The announcement comes in the wake Icelandair laying off 2,000 employees on Tuesday in the single largest layoff in Icelandic history.

“Icelandair Group has been in close contact with the Icelandic Government” during its restructuring process, concludes Thursday’s statement, which also notes that the Icelandic government “is willing to consider granting the Company a credit line or providing a guarantee for such credit line conditioned upon the completion of the share offering.”

Icelandair will publicly announce the price of the new shares, as well as related terms and conditions, following the proposal’s presumed approval at its upcoming shareholders’ meeting.

Government to Sell Share in Íslandsbanki

Prime Minister Katrín Jakobsdóttir says that proceeding with the sale of part of the government’s share of Íslandsbanki is “sensible” provided that the proceeds go towards investment in Icelandic infrastructure, Kjarninn reports. Doing so would free up governmental assets for use in much-needed projects. Discussions about the expected sale have already taken place within the ministerial committee on economic affairs, which Katrín sits on alongside Minister for Finance and Economic Affairs Bjarni Benediktsson and Minister for Education, Science, and Culture Lilja D. Alfreðsdóttir.

Katrín says that emphasis will be placed on making the sale open and transparent. The government will not be involved in the decision about who will be sold up to 25% of its share in the bank. The sale will take place via a listing on the Icelandic Stock Market. “It is important that this is fair for those who are interested,” she noted.

The Icelandic government currently owns all of Íslandbanki’s stocks, as well as the vast majority of Landsbankinn’s. The government has hoped a foreign bank would buy a share in Íslandsbanki, preferably one based in a Nordic country. Thus far, however, no such entity has expressed an interested in doing so.

Unlikely to get full price, but still worth it

The government’s current agreement states that Iceland’s financial system must be stable and serve Icelandic society in a cost-effective and fair manner. It also notes that “[t]he state’s ownership of financial institutions is the most extensive in Europe and the government wants to find ways of reducing this.”

A 2018 white paper outlining a “future vision for the financial system” of Iceland discussed in detail how the proceeds from the sale of shares in state-owned banks should be used. Conducting the sales via stock market listings is meant to restructure ownership of Íslandsbanki and Landsbankinn and ensure that well-distributed and stable ownership of these institutions will be a facet of the financial system in the future.

In an interview with Morgunblaðið on Wednesday, Minister for Finance and Economic Affairs Bjarni Benediktsson noted that given current market valuations, it is unlikely that the government would be able to obtain the full recorded price for the share, which is over ISK 170 billion [€1.2 billion; $1.35 billion]. “It is, nevertheless, right in my opinion that [the government] should give up ownership in stages and a 25% share in the bank is worth tens of billions of krónur,” he concluded. “We could then use that capital toward profitable investments in infrastructure.”

‘The economy is ready’

Bjarni published his views on the potential benefits of the proposed sale of up to 50% of the government’s share in Íslandsbanki in a special Independence Party publication on Thursday entitled “On the Right Track.”

“In recent years, there’s been a lot of talk about tariffs to fund public transportation improvements and that’s understandable,” he wrote, “because we need to speed up construction, but a more convenient way is to [sell] this valuable asset and limit tariffs in the future to larger construction projects on the level with [the tunnels] Sundabraut, Hvalfjarðargöng, and other tunnel construction. This is a good time to consider these kinds of efforts; the economy is ready for public construction.”

Bjarni has been a vocal and repeated advocate for the sale of the government’s shares in Íslandsbanki and Landsbankinn, although he does want the government to retain a minority share in the latter bank.

Icelandic Company Marel Listed on Amsterdam Stock Exchange

Marel Euronext Exchange

Shares in Icelandic food processing company Marel were admitted to trading on the Euronext stock exchange in Amsterdam this morning, Kjarninn reports. The company’s shares rose in value immediately as trading began. Marel will continue to be listed on the Iceland Stock Exchange as well.

Marel is one of the world’s largest manufacturers of food processing machinery, employing around 5,500 people in over 30 countries. The company’s total market value has been estimated at €2.82b (ISK 393b/$3.2b).

“The listing on the Euronext Exchange will support the next steps in the company’s development and support ambitious growth goals,” stated Marel CEO Árni Oddur Þórðarson. “Our vision is a world where high quality foods are produced in a cost-effective and sustainable way.”

Financial Supervisory Authority Demands Closure of Crowdfunding Website

WOW air

A group purportedly aiming to resurrect WOW air has been ordered to close their crowdfunding website by Iceland’s Financial Supervisory Authority. The site is requesting 10-20,000 shareholders for the purpose of resurrecting the recently-bankrupt airline or founding a new low-cost airline to take its place. RÚV reported first.

According to a statement released by the Financial Supervisory Authority, the crowdfunding initiative does not fulfill the requirements of the Act on Securities Transactions. The statements ends by warning investors that they do not enjoy the same legal protection of their purchases via a private initiative as when they purchase stocks in a company that is registered on the stock market.

WOW’s former CEO Skúli Mogensen says he is in no way connected to the effort but is following closely. WOW air officially ceased operations on March 28, leaving thousands of passengers stranded and some 2,000 locals unemployed.