The Wallenbergs' Flagship May Cross The Ocean

A U.S. listing for Investor would raise badly needed capital

In 1973, Claes Dahlback moved to New York as a fledgling analyst for Swedish holding company Investor, and saw the future. It was Wall Street. "I realized that U.S. investors were more interested in growth companies than the Europeans were," says Dahlback, now 48 and CEO of the Wallenberg family's flagship company. "I knew that Investor would have to be listed in New York someday." True to his word, this spring Dahlback will meet with Investor's board to decide whether to list the company either on the New York Stock Exchange or NASDAQ. Chances are good, says Dahlback, that the board will approve an offering.

A New York listing for Investor, now 44% Wallenberg-owned, is just one sign that this Swedish institution is on the brink of big change. With patriarch Peter Wallenberg nearing 70 and preparing for retirement, his son Marcus and nephew Jacob are eager to leave their stamp. Although the Wallenbergs are not talking, Swedish financial sources say the new generation, with Peter's blessings, wants to raise badly needed capital, broaden the shareholder base, move into new areas, such as information technology and media, and diversify Investor's holdings outside Sweden.

NO THREAT. Don't expect the clan to give up control. Promises Dahlback: "The Wallenberg family will continue to have the same strong influence." Yet the family needs more outside investors to boost Investor's stock price, which trades around $35 a share in Stockholm--below its book value of $38. That discount is frustrating for executives at Investor, which has major stakes in truckmaker Scania, Saab Auto, drugmaker Astra, forest-products company Stora, telecom company L.M. Ericsson, and appliance manufacturer Electrolux. It also controls Incentive, another investment company with positions in heavy-machinery manufacturer Asea and auto-parts maker Garphyttan.

Now is the time for the Wallenbergs to attract foreign investors. Scania, Astra, and other holdings all had a great year, and Investor's 1995 pretax profits jumped 57%, to $685 million. A global public offering of Scania should bring in $2.2 billion to Investor, while Astra plans a U.S. listing as well. Meantime, Investor may also sell shares in Electrolux and Asea.

Dahlback already has to deal with one big U.S. shareholder: Heine Securities, run by renowned stock picker Michael Price, who holds a 7% stake in Investor. Dahlback says he sees no threat in Price, who recently helped force the sale of Chase Manhattan Bank. But having a large number of American investors will be a new experience for the Wallenbergs. U.S. investors are more likely than Europeans to push for a voice in company affairs.

What's more, to interest potential shareholders, the company will have to disclose more of its plans. For example, it's unclear whether Investor will buy the rest of Incentive or do another deal within the Wallenberg companies. Such maneuvering might not boost the shares. "As long as there's a question, it would be troublesome for the stock," says Peter Dombos, an analyst with Aragon Fondkommission in Stockholm.

Investor officials say the market will be more appreciative after cash from the Scania sale is used to pay down debt of $785 million and plowed into growth companies. Investor recently put money into WM-data in Sweden and Tietotehdas in Finland, two companies that design software and operate corporate data systems. Investor is also studying the possibility of building a media conglomerate around its stakes in Stockholm daily paper Svenska Dagbladet and commercial TV station TV4.

Some of the Scania proceeds could shore up beleaguered Saab Automobile, which Investor owns 50-50 with General Motors Corp. Officially, no decision has been made about whether to put money into Saab or sell out to GM. Sources say Investor considers Saab too prestigious to let it be taken over totally by an American company. Dahlback may face some tough questions if too much money is funneled into Saab. He and the Wallenbergs will have to get used to a noisier class of shareholder as Investor reinvents itself.

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