Active Listed Holdings
Traction is an active major owner in a number of smaller and medium-sized listed companies. We invest in companies where we see a significant revaluation potential and where the risks are manageable. Other involvement in listed companies can be in the form of underwriting equity offerings in companies in need of new capital and where we see a potential for good returns. Traction has been an owner in some of the companies listed below before they became publicly listed and we participated actively in their respective processes of going public. Below listed companies refers to companies where Traction has an ownership stake exceeding 10 percent of the votes or where Traction has an active role as represented in the companies’ Board of Directors.
BE Group is a trading and service company in the steel and metals industry. The company’s approximately 10,000 customers are primarily found in the engineering and construction industries in Sweden, Finland and the Baltic States, where BE Group is one of the market’s leading suppliers. With solid competence and effective processes in purchasing, logistics and simple production, BE Group offers sales from inventory, production services and direct delivery based on their specific needs for steel and metals products. BE Group has just over 700 employees and sales of MSEK 4.3 billion in 2017. The head office is located in Malmö. The underlying operating profit improved during 2017 from MSEK 33 to MSEK 82. Traction has been engaged in the company’s board of directors since 2012 and since 2015 Traction’s CEO is also Chairman of the Board. BE Group is listed on NASDAQ Stockholm since 2006.
Drillcon is Europe’s largest company in diamond core boring and a major raise boring contractor. The company’s market consists of customers in the European mining and construction industries. The main business is currently run via subsidiaries in Sweden, Portugal, Spain and Norway. In 2016 Drillcon started operations in South America by establishing subsidiary in Chile. These subsidiaries perform services for customers in several countries. In Sweden Drillcon delivers drilling services to Boliden, LKAB, Lundin Mining and others. Core drilling is used to take samples in rock formations and can also be used for concrete reinforcement, while raise boring is a method for drilling shafts in rock for ventilation purposes and for mining lifts and such. The entire offer is available in all markets. Drillcon has been in the business since 1963 and its head office is located in Nora. In recent years Drillcon has invested heavily to meet growing demand in both core boring and raise boring. Traction is a part owner of Drillcon since the autumn of 2008 and after a mandatory offer in 2013, ownership was increased substantially to today’s 54 percent. Drillcon is listed on NASDAQ Stockholm, First North.
Duroc is an industrial group that owns industrial and industrial- trading businesses in a number of different market segments. Duroc has undergone major restructuring in recent years and in the beginning of 2017 Duroc grew substantially through an offer In kind for International Fibres Group AB (”IFG”), which also meant that Duroc got a new principal owner in the form of Peter Gyllenhammar AB. IFG produces more than 100,000 tonnes of synthetic fibre and yarn at its plants in USA, Great Britain, Austria and Belgium. Synthetic fibre is used in applications such as plant protection and soil-separation matting, but also in passenger cars for carpeting and as reinforcement and insulation material in fenders and other sheet metal parts. IFG’s revenue amounts to approximately MSEK 1.8 billion. Other significant companies in the group are Duroc Machine Tool, a seller of machine tools on the Nordic and Baltic markets, and Duroc Rail that maintains and resurfaces railway wheels. Duroc has approximately 770 employees and revenue of approximately SEK 2.3 billion. The company is listed on NASDAQ Stockholm.
Hifab Group Group is one of Sweden’s leading groups in community project management. Hifab supports its principals through all phases of construction projects, from the early strategic issues until completion and property management. Depending on the specific situation in the project, Hifab offers consultants who assume full project responsibility, or specialists who manage specific subprojects. The ambition has been the same since 1947 – to realize the customers’ ideas. Hifab delivers its services all over Sweden and contributes to a sustainable societal development in several market segments, such as property management, infrastructure, industry, environment, energy and process technology.
Via several subsidiaries Hifab manages aid-funded development projects in the areas of infrastructure, water supply, energy efficiency improvement, and rural development in more than 20 countries worldwide. Hifab has approximately 350 employees and 2017 revenue of MSEK 445, approximately 75 percent in Sweden and 25 percent in international assignments. Hifab is listed on NASDAQ OMX First North.
Nilorn is an international group, founded in 1977, that adds value to trademarks through branding and design in the form of labels, packaging and accessories for customers, primarily in the fashion and garment industries. Slightly simplified,
the customers can be categorized as trademark owners and chain companies. Nilorn strives to enhance its customers’ competitive edge by offering services covering all design resources, plus a logistics system that ensures reliable and short delivery times.
Nilorn is one of Europe’s leading players with revenue of MSEK 680. Nilorn supplies more than 1,5 billion labels per year of different sizes and types. Nilorn is represented by subsidiaries in twelve countries: Sweden, Denmark, Germany, Belgium, Great Britain, Portugal, Hong Kong, India, Turkey, Bangladesh, Pakistan and China.
Approximately 80 percent of sales are outside the Nordic countries. Nilorn is also active in Switzerland, Austria, Italy and Spain. Nilorn has established logistics centres at important locations such as Hong Kong, Turkey, India, Bangladesh, China and Pakistan. The group has its own production of printed labels in Great Britain, Turkey, India and Hong Kong, and production of woven and printed labels in Portugal. Since Traction took Nilorn private in 2009, the company has showed a strong development and is currently operating with good profitably. In June 2015 Nilorn was listed on NASDAQ First North in Stockholm and is expected to be listed on NASDAQ Stockholm.
OEM International is one of Europe’s leading technology trading groups in industrial components and systems. The group sells to more than 25,000 customers in selected markets in northern, central and eastern Europe. OEM offers a broad and deep range of goods, entailing more than 50,000 different products, from some 300 leading and specialized suppliers of electrical components, flow technology products, motors and transmissions, ball bearings and seals, apparatus components and lighting. Thanks to a well-developed marketing organization and effective logistics, OEM is a better alternative for many suppliers than to have their own sales companies. OEM contributes a high degree of expertise and service and markets the products based on the specific requirements of each individual market. The product range offered is also adapted to each respective market and the local organization is assigned the task ofcontinuously searching for new products in an effort to further developing the competitive edge in OEM’s offer to its customers. Traction has been an owner of in OEM since the end of 2009 and is represented on the Board of Directors since the spring of 2010. OEM International is listed on NASDAQ Stockholm.
Softronic is a consultancy company in IT and management, the services of which span the spectrum from consulting and new development to management and operation. Softronic has a holistic approach to change, which means that the company can support its customers in everything from strategy to structure, including organisation, processes and IT. Most customers are medium-sized and large companies, and organisations in Sweden. Customer relationships are distinguished by a long-term approach and the company’s cooperation agreements often go back 10-20 years. One example of Softronic’s offer is the anti-money-laundering service CM1, with which more than 100 customers such as The Swedish Financial Supervisory Authority, Swedbank and Skandiabanken are assisted in monitoring and identifying transactions that may be associated with criminal activities and terrorism. Softronic was founded in 1984 by Anders Eriksson, who still is the company’s largest owner in terms of votes. Most of Softronic’s employees are located in Stockholm. The company is also active in Göteborg, Malmö, Sundsvall, Arjeplog and Överkalix. Softronic is listed on NASDAQ Stockholm.
Active Unlisted Holdings
Traction’s active unlisted holdings consist of wholly- and majority-owned companies as well as minority-owned companies. In the minority-owned companies we co-operate with entrepreneurs and other active owners. The business concept is to develop successful companies as an active partner. The majority-owned companies are usually turn-around projects, reorganisations, management buy-outs or similar situations. Over the years Traction has participated in bringing several unlisted companies public.
Ankarsrum Motors develops and manufactures electric motors and associated components and products in which an electric motor is a part. Most of Ankarsrum Motor’s customers are industrial companies in the United States and Europe.
Operations are divided into DC motors, universal motors and kitchen appliances. In the field of DC motors, and the welding wire segment, Ankarsrum Motors is today one of the leading independent producers in the world with a large number of customers. Other buyers of DC motors are found in the health care sector, agricultural machinery and other industry. For universal motors Ankarsrum Motors has a highly automated production line with significant capacity. Over the years the company has delivered millions of motors, mainly to the kitchen appliance industry, with high demands on quality and longevity.
The company often assumes integrated development responsibility for products in close co-operation with the customer. Ankarsrum Motors has highly automated production and the company in co-operation with its customers in adapting to quieter, more reliable and vibration-free motors. Ankarsrum Motors also manufactures the classic Swedish food processor Assistent Original™, which has been in production since 1940.
Ankarsrum Kitchen is a company that markets and sells the classic household appliance Assistent Original™ from Ankarsrum. Assistent Original is a Swedish classic from 1940. It has been updated many times since then. The machine is manufactured and assembled by Ankarsrum Motors. Since 2014 the company owns the trade mark Assistent Original™. The company has strongly established sales on the Swedish home market, but most of the production is today exported via distributors. Aside from in the Nordic countries, Assistant Original is sold to, among othewr markets, Germany, England, USA and China. The number of distributors increases year by year. In Sweden approximately 50% of the kitchen appliances are sold online.
AB Mönsterås Metall
AB Mönsterås Metall delivers aluminium castings to customers with high technical requirements. In February 2018 Mönsterås Metall acquired Ankarsrum Die Casting from Traction. In connection herewith Traction became the largest owner of Mönsterås Metall. The company produces high volumes of die-castings and specialised products in the form of case-hardened and sand castings for customers within several industrial segments. On the die-casting side the Mönsterås Metall group manufactures and sells high quality die cast castings aluminium to, among other, the European automotive industry. The company specialises in manufacturing requiring high precision, a high degree of purity and which is virtually non-porous. The components are usually used in advanced systems. The Mönsterås Metall group has 15 casting machines with clamping power of between 160 and 190 tonnes at two facilities in Mönsterås and Ankarsrum.
The Mönsterås Metall Group also manufactures aluminium castings in smaller series and with advanced geometry employing sand and chill casting. Post-processing takes place in efficient automated processing and washing cells. Within the Mönsterås Metall group the following certifications applies: ISO9001, ISO/TS16949 and ISO14001. Both Mönsterås Metall and Ankarsrum Die Casting have gone through a transition period in recent years. Thanks to active sales work and streamlining of production earnings are expected to increase during 2019.
Recco Holding is via a subsidiary the owner of the RECCO rescue system which is used by more than 700 rescue organisations, mountain rescue services and helicopter companies all over the world to locate avalanche victims. The system is comprised of two parts and consists of RECCO detectors used by organized rescue missions and RECCO reflectors built in to skiing equipment, such as clothing, helmets and boots. RECCO is based on a radar technology, which allows for rapid and precise locating of avalanche victims carrying a RECCO reflector. The reflectors are entirely passive and require neither battery nor knowledge about how to use them. The RECCO system is intended for organized rescue missions and is not an alternative to but a complement to the use of transceivers allowing companion rescue. Since the RECCO system enables much faster organized searching, skiers and snow-boarders who have been overcome by an avalanchehave one more chance of being saved in time.
The RECCO system is established at all skiing resorts of distinction in the world. After several years of development work there is now a helicopter-carried detector that can be used all year to locate rapidly carriers of RECCO reflectors also in other emergency situations than avalanche accidents. RECCO reflectors are therefore launched by several leading brands for their summer collections in 2019. This will lead to a considerable expansion of the market for RECCO going forward, opening opportunities for considerable growth.
Sigicom is the leading Nordic supplier of field measuring systems for unmanned monitoring of vibrations, noise and other environmental disturbances (such as particles in air). Field measuring systems monitor construction sites, mines, quarries, and road and rail traffic. Sigicom sells its measuring systems and services on a global market. Exports account for most of the company’s revenue. USA, England, France and the Nordic countries are large markets for Sigicom.
The company has developed the market’s most innovative field measuring system, from sensor to web presentation and report. For Sigicom’s customers this means simple installation, automated measurements and cost-effective surveillance. The sensors constantly measure what is going on and can be triggered by a certain disturbance and will the register detailed signal sequences and trigger alarms to selected users. The measuring instruments are ruggedly construed and are highly accurate and reliable. Aside from web-based application programs, Sigicom also offers support service and regularly scheduled calibration.
Sigicom has an ambitious growth agenda based on product leadership and internationalization. Sigicom has invested heavily in development of a new instrument platform launched during 2017. Sigicom is in the midst of an intense phase of internationalization and has seen substantial growth in its new markets. In 2018, Sigicom for the first time exceeded a 100 million SEK annual turnover.
Traction’s investments that are not categorized as active holdings are classified as financial investments, for instance in the form of equities, corporate bonds or CDs. The composition of different classes of assets is largely dependent on prevailing market conditions.
The purpose of the financial investments, as opposed to the active holdings, is not to create value through active ownership. The goal is rather to generate a current return through more traditional management, also on the portion of Traction’s capital not engaged in active holdings. The magnitude of the financial investments thus depends on how large a portion of the net asset value is invested in active holdings from time to time. The financial investments are evaluated on an ongoing basis and on average have a shorter investment horizon than active holdings.
An equity investment that is initially classified as a financial investment can, over time, develop into an active listed holding. By following companies as a minor owner, we have better opportunities to evaluate business models as well as corporate managements.
A major portion of the financial investments consist of liquid holdings that can be sold on short notice. This is important in order to retain the flexibility to be able to support on short notice existing active holdings, to invest in new holdings, and to participate in underwriting consortia for new issues and other refinancing situations. The sentiment on global financial markets continued to be positive during 2017 and Traction’s financial investments fared well during the year.
Traction has a long history as an underwriter of public issues. This has occurred in a number of different situations, such as In connection with widening ownership through private placements, initial public offerings, financing acquisitions and expansion, refinancing maturing debt, saving the company from insolvency, or simply strengthening the balance sheet in general.
- Traction has issued guarantees for companies where we already are part owners, or merely to safeguard the Issue itself. On occasion we have been the sole underwriter and sometimes we are part of an underwriting consortium.
- Traction has also been engaged in ancillary services, such as being a lender until the company has completed the issue.
- Related services include subscribing for securities in private placements, without pre-emptive rights, and to purchase a major shareholder’s lot of shares.
- Traction views this as a financial service, but is also prepared to become a long-term owner.
Over the years Traction has participated in some 30 underwriting consortia.