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Who are Sweden’s powerful Wallenberg family?

Who are Sweden’s powerful Wallenberg family?

Recently announced flotation offers a peep into the vast Wallenberg empire

The Wallenbergs control a vast business empire made up of large stakes in many of Sweden’s biggest multinationals and worth tens of billions of pounds

By Ben Marlow

7:00PM BST 21 Jun 2014

On the southern coast of a small island in Stockholm, sits an opulent, turreted chateau, set back from the water’s edge.

Around 10m people a year visit the island, Djurgården, a former royal hunting estate and now one of the most popular parks in Sweden, to explore the lush meadows and dense forest. Many will pass the impressive French renaissance-style villa, but few will be aware of its significance.

For nearly 130 years, Täcka Udden has been the private residence of Sweden’s most famous of business dynasties: the Wallenbergs. Surrounded by towering hedges and trees, the secluded setting fits the family motto: Esse non videri – “To be, but not be seen”.

The Wallenbergs are extraordinarily powerful. They control a vast business empire made up of large stakes in many of Sweden’s biggest multinationals and worth tens of billions of pounds. Through a network of shareholdings owned by foundations, the family controls or is a major shareholder in scores of companies including Saab, the car manufacturer, Electrolux, the electrical goods maker, Ericsson, the telecoms giant, and AstraZeneca, the Anglo-Swedish drugs giant.

By the late 1990s the Wallenbergs’ holding company, Investor AB, was estimated to own roughly 40pc of the Swedish stock market. In short, their influence in Swedish business is unmatched.

Control of the industrial kingdom has been divided between two cousins – Jacob and Marcus Wallenberg, and they sit on the board of virtually every large company in Sweden. The family’s tentacles also stretch to British shores, albeit indirectly. The Wallenbergs’ extensive interests include a private equity firm – EQT Partners – that is among Europe’s biggest and is about to float the fast food giant SSP on the London stock exchange.

SSP will be unfamiliar to most, but commuters and travellers will recognise its brands. It owns fast food outlets including Upper Crust, Caffè Ritazza, Delice de France and Millie’s Cookies, and has operations in 30 countries. Led by Kate Swann, the former head of WH Smith, it intends to float next month with a value of around £2bn.

EQT was founded two decades ago as the Wallenbergs sought to diversify their interests beyond their homeland. The family empire sprang from a single bank more than 150 years ago. SEB, now one of the top banks in Sweden, was founded by André Oscar Wallenberg, a naval officer, who had collected books on banking while sailing around the world. It was one of the country’s first commercial banks.

The Wallenbergs have been a prominent name in Swedish society for centuries, producing a remarkable sequence of bankers, industrialists, statesmen, politicians, philanthropists, and even a Davis Cup tennis player.

Investor AB was established in 1916 after a new Swedish law forced all banks to divest stakes they held in other companies. SEB’s interests were spun out into Investor. Today, Jacob is chairman of the holding company, as well as SAS, the airline, and Ericsson. Marcus chairs SEB, Saab, and Electrolux and has a roster of directorships including AstraZeneca. He is also on the board of EQT.

In 1993, while still only in their mid-30s, the pair were handed joint control of the Wallenberg empire by Jacob’s father, Peter. They are the fifth generation it has passed to.

At the time of their succession, the empire looked shaky and unmanageable as a result of large debts, weakening profits and over-exposure to Sweden’s industrial giants.

Shares in SAS, Scania, and OMX, the Swedish stock exchange, were sold off over the next decade, and EQT quickly established to enable rapid diversification.

The private equity fund has invested in around 120 companies since and still owns about half of those.

Most have been in western or northern Europe. SSP is the only British company it has owned, but its float plans have shone a light on one of Europe’s richest families.

 

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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