Below is a summary of the business news of relevance in Iceland the week beginning on 12 June 2023. The summary, which is based on publicly available information only, is prepared by the BBA//Fjeldco team for the benefit of clients and contacts of the firm and is subject to the disclaimer noted below.
Wednesday, 19 June 2023
Pension funds to invest 50 million USD in supply monitoring company Controlant
Merger of insurance company VIS and Fossar Bank approved by shareholders of VIS
Leveraged real estate companies not a concern for financial stability according to CBI
Isfelag , the fourth largest fisheries company in Iceland worth 80 billion ISK – plans to list on Nasdaq
Increasing number of mergers a direct result of economic pressure according analysts
Research centre for capturing CO2 in Iceland
Metals intelligence company DTE raises 1.4 billion ISK in equity
Any significant increase in seawater fish farming a political decision
Airline Play has lost 83 million USD while growing fast – plans to turn a profit this year
Faroe Islands linked to Icelandair ´s North Atlantic routes
Arctic Green Energy acquires Mannvit engineering consultancy in Hungary
Biopharmaceutical company Oculis receives award from the Icelandic Association of Business and Economics
US bill on ocean innovation clusters based on The Iceland Ocean Cluster model
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Pension funds to invest 50 million USD in supply monitoring company Controlant
Some of Iceland´s largest pension funds are to invest in the supply chain solution provider Controlant, which is increasing its equity and seeking funding for supporting further growth, according to business website Innherji. The company enables its pharmaceutical clients to reduce waste and ensure patient safety through real-time visibility and digital transformation The company has grown dramatically in recent years – last year the turnover doubled to 20 billion ISK. According to the report, shares will be sold for 50 million USD, or 8% of all shares. Innherji also reports that Mr Soren Skou, former CEO of the Danish global freight and logistic company AP MollerMaersk, will be appointed as the new chair of the company ´ s board at the next AGM
Merger of insurance company VIS and Fossar Bank approved by shareholders of VIS
At a shareholder meeting of insurance company VIS last week, a large majority of shareholders approved an increase of equity in the company and the acquisition of Fossar Bank. Business website Innherji reports that 83% of votes were in favour of the merger, which is conditional on the approval of the Icelandic Competition Authorities. Pension fund Gildir, the third largest investor in VIS and holder of 9 6% of all shares, had previously announced publicly that it did not approve the valuation of the unlisted Fossar Bank and were going to oppose the acquisition. The owners of Fossar Bank will receive 12.62% of shares in the merged company as payment. According to a report in business gazette Vidskiptabladid,
the total market value of the company is 33 5 billion ISK
Leveraged real estate companies not a concern for financial stability according to CBI
Business website Innherji reported that according to the Central Bank of Iceland, leveraged real estate companies are not a concern for the financial stability in Iceland as they might be in other economies Even though real estate companies are sensitive to increasing interest rates there is no excessive supply of office and industrial housing in Iceland, as is the case in many other economies, according to CBI governor Asgeir Jonsson, and it should be noted that real estate companies in Iceland hold index linked rental agreements and the rate of occupancy is high
Isfelag, the fourth largest fisheries company in Iceland worth 80 billion ISK –plans to list on Nasdaq
Two of the largest fisheries companies in Iceland, Isfelag Vestmannaeyja and Rammi in North Iceland, have agreed the terms for a merger The merged company will be called Isfelag and will be valued at 80 billion ISK, according to a report on business website Innherji. One third of the shares will be owned by the shareholders of Rammi and two-thirds by the family from the Westman Islands in Southern Iceland that owns
Isfelag Vestmannaeyja. The new company will be the fourth largest fisheries company in Iceland and is planned to be listed on Nasdaq Iceland in the near future.
Increasing number of mergers a direct result of economic pressure according to analysts
Factors such as persistent inflation, increased costs, high interest rates and tighter access to financial markets are pushing companies to seek means to improve operations, which includes considering merger options, says Snorri Jakobsson, managing director of Jakobsson Capital, in an interview with business gazette Vidskiptabladid According to the newspaper, the Icelandic economy is experiencing a merger wave In addition to high value mergers in the fisheries sector that were agreed last week between Isfelag Vestmannaeyja and Rammi, there are currently ongoing merger talks between companies in the financial sector and in real estate. Last February Islandsbanki and Kvika bank (total market cap of 314 billion ISK) announced merger talks just one week ahead of a similar announcement from insurance company VIS and Fossar Bank (total market cap of 33.5 billion ISK) on a merger that has just recently been approved by shareholders. In addition, real estate company Reginn has made a take-over bid on Eik real estate company, which could lead to a merger of two companies with a joint market cap of 79 5 billion ISK According to Jakobsson, further announcements of mergers should be expected.
Research centre for capturing CO2 in Iceland
Daily newspaper Morgunbladid reports that Icelandic climate enterprise Transition Labs has signed an agreement with the recently founded non-profit research and development effort Carbon to Sea Initiative, in order to explore the feasibility of establishing a research centre in Iceland The purpose of Carbon to Sea Initiative, which has raised 7 billion ISK in funds from large international companies, is to accelerate research in ocean alkalinity enhancement (OAE), which is a way to address climate change and could be among the most effective and scalable carbon dioxide removal approaches
Metals intelligence company DTE raises 1.4 billion ISK in equity
The Icelandic metals intelligence company DTE has raised 1 4 billion ISK in equity for further developing its technology, according to business gazette Vidskiptabladid
DTE’s proprietary LP-LIBS technology provides live elemental analysis direct from molten metal with reference grade precision and repeatability. The technology has been developed in cooperation with the Icelandic aluminium production industry and is now used by five large customers over three continents The participants in the funding were the international aluminium giant Novelis, which operates forty recycling plants
globally and VC funds Metaplanet, Chrysalix Venture Capital, Brunnur Venture from Iceland and one of the funds operated by the European Innovation Council
Any significant increase in seawater fish farming a political decision
The production capacity of seawater fish farming in Iceland can increase from 50 thousand tons in 2022 to 234 thousand tons, according to a progressive scenario projected by the Boston Consulting Group in a report written for the Icelandic government Bjorn Hembre, the CEO of Arnarlax, which is the country’s largest fish farming company, says in an interview with daily newspaper Morgunbladid that there are exciting times ahead as there is potential to make fish farming one of the pillars of the Icelandic economy. His company is currently producing 16 thousand tons of salmon and the production value is already 3% of Iceland´s total export value The production capacity of Arnarlax is expected to increase up to 25 thousand tons in 2025 Further expansion depends on political decisions as the government is currently working on the policy for the future of seawater fish farming. Arnarlax is owned by the holding company Icelandic Salmon, which is listed on the Oslo Stock Exchange and is majority owned by the Norwegian seafood giant SalMar ASA According to Hembre, domestic investors hold 20% of all shares in the company
Airline Play has lost 83 million USD while growing fast – plans to turn a profit this year
The airline Play has grown rapidly since it began services in June 2021 and will soon have ten aircraft in its service flying to and from Iceland Expectations are that it will deliver a profit this year, in its second year of full operations. Business gazette Vidskiptabladid reports that according to the company’s Q1 2023 results, the company is operating at a total loss of 83 million USD Last November, existing shareholders raised an additional 2 3 billion ISK by buying shares for 14 6 ISK each, compared to 18 ISK per share in the company ´ s IPO in June 2021. Last Friday, trading in Play closed at 11.05 ISK per share. Birgir Jonsson, the company ´ s CEO, says further fundraising will not be required as the operations are beginning to turn a profit
Faroe Islands linked to Icelandair´s North Atlantic routes
Icelandair has announced that that it will begin scheduled flights between Iceland and the Faroe Islands next year, according to daily newspaper Morgunbladid The five or six flights per week will link the Faroe Islands to Icelandair´s network of North Atlantic routes between Europe and North America. According to Tomas Ingason, CRO of Icelandair, the Faroe Islands are considered a growth area in tourism and scheduling of these flights will benefit passengers travelling between the Faroe Islands and the airline´s sixteen destinations in North America
Arctic Green Energy acquires Mannvit engineering consultancy in Hungary
The Icelandic engineering consultancy Arctic Green Energy has bought the Hungarian subsidiary of engineering company Mannvit, which was recently acquired by the international engineering and architect company Cowi. Mannvit Kt in Hungary was established in 2007 and has primarily worked on geothermal projects in Central Europe
Biopharmaceutical company Oculis receives award from the Icelandic Association of Business and Economics
Last week global biopharmaceutical company Oculis received the 2023 Knowledge Award from the Icelandic Association of Business and Economics. According to a statement from the company it received the award for its research in developing Oculis’ OPTIREACH solubilizing formulation technology by the company ´ s cofounders, Icelandic medical professors Einar Stefansson and Thorsteinn Loftsson OPTIREACH was created to solve the limitations of conventional eye drops, including the limited solubility of drugs in eye drop formulations, quick removal by tear flow and inability to deliver drugs to the retina
US bill on ocean innovation clusters based on The Iceland Ocean Cluster model
A cross-political group of US Senators have presented a bill to set up ocean innovation clusters, based on the Icelandic model, in order to support economic growth in the socalled blue economy, as reported by US seafood industry news website Seafood Source. This partly stems from a 2011 visit by US Senators to Iceland where they visited the Iceland Ocean Cluster, which hosts a variety of parties working on ocean related projects The New England Ocean Cluster is another establishment based on the Icelandic model Established in partnership with the founder and chairman of the Iceland Ocean Cluster, its hosts a variety of ocean-based groups in its offices in Portland, Maine. The Iceland Ocean Cluster model has also spread to Seattle, Washington, in the establishment of the Pacific Northwest Ocean Cluster “There has never been a better time to invest in blue economy companies that embrace people, planet, and profit as part of one mission,” New England Ocean Cluster Co-Founder and CEO Patrick Arnold said in supporting the legislation.
