business

Percy Barnevik: New Company, Same Ambition

How ABB's former CEO plans to transform Sweden's Investor

Giving up the helm of one of Europe's premier companies would be a letdown for most executives, but Percy Barnevik seems positively recharged. After stepping down as CEO at ABB Asea Brown Boveri Ltd. at yearend, the intense, 56-year-old executive moved from Zurich to London's fashionable Mayfair district. Then, effective on Apr. 14, he signed on as chairman of Investor, the giant holding company controlled by Sweden's Wallenberg family. Now, he's excited by the prospect of a new global adventure. "I want to bring my experience to bear in a different way [from ABB]," he said in a recent interview at Investor's spare London office.

Barnevik's ambitions for Investor are even more far-reaching than those he had for ABB, where he pioneered as a global manager and created what many consider the model stateless company. While Investor's concerns today are mostly in Sweden, Barnevik thinks the holding company, with its talented team of executives and analysts, could become a world power. He envisions it adding major ventures in the U.S., emerging markets, and perhaps Eastern Europe.

Barnevik's plan is for Investor to take minority stakes in non-Swedish companies. But Investor would influence these companies by helping to choose CEOs and giving counsel on strategy. That's how it manages its empire of Swedish heavyweights, which have a combined market capitalization of some $100 billion. Investor doesn't control telecommunications giant Ericsson or drugmaker Astra, but their bosses listen to its quiet advice--especially at times of change or crisis. And Barnevik thinks this modus operandi might prove effective globally: "If you are prepared to put in time and effort to improve performance for everybody, the other shareholders are often happy with that."

Investor is already beefing up offices in New York, London, and Hong Kong to scout for opportunities. It has shown an interest in medical technology and in data processing, but Barnevik says there is a lot of opportunity in "nonsexy" industries, as he showed at power-equipment worker ABB.

Barnevik believes it's essential to establish beachheads in emerging markets. "If you want to be a global player in 20 to 30 years," he says, "you had better be a strong domestic player [in countries such as] China, India, and Indonesia now." His access to political leaders such as China's Premier Li Peng or Poland's President Alexander Kwazniewski should also help him troubleshoot for companies such as Ericsson or ABB (where Barnevik remains chairman) that are already global players.

Still, he says strategists shouldn't ignore the U.S. "If you succeed in the U.S.," he says, "you have succeeded in an unprotected, cutthroat, extremely competitive market, and your whole group gains."

DUMPED? But Barnevik may get more bang for his krona by tinkering with Investor's Swedish blue chips. He makes it clear that he'll be taking a close look at these holdings, where 20% annual returns conceal some laggards. Barnevik emphasizes that he will "relentlessly push for higher targets and instill a mentality of continuous change." He prefers to fix problem companies but thinks if that's not possible, they should be dumped.

Investor stakes that could be headed for disposal include those in auto maker Saab, bearings giant SKF, and even appliance maker Electrolux, whose performance has been disappointing. Barnevik scoffs at rumors that Investor might be eyeing the other Swedish auto maker, Volvo: "When you have the whole world of opportunities, why would you want to buy into another mature mechanical engineering company?"

Another underperformer is S-E-Banken, Sweden's No. 3 Bank. Investor has been increasing its stake--and has cleaned house. On Apr. 30, Peggy Bruzelius, an ABB financial whiz, was brought in to head up a new asset management arm, which Investor hopes will boost profitability.

Despite his global experience, Barnevik could have trouble using Investor to run a foreign empire. It's one thing to dominate the small world of Swedish boardrooms, as Investor does. Applying the model to the U.S. or Asia, where Investor won't be the big fish and lacks decades of accumulated knowledge, will prove much tougher.

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