Invalda INVL, one of the Baltic region’s leading asset management groups, had equity of EUR 86.8 million at the end of 2019, or EUR 7.47 per share (which is 32.5% and 31.8% more, respectively, than at the end of 2018). The net profit Invalda INVL earned last year was EUR 20.8 million, compared to a 2018 figure of EUR 0.34 million. The change in profit was mainly due to the increased value of investments.
Assets under management of more than 230 000 clients of the group’s companies exceeded EUR 1 billion at the end of 2019 and increased by 54% during the year.
Asset management business
“The year 2019 was good for the Invalda INVL group. We continued focused work and global markets were also favourable. That allowed us to earn EUR 140 million for the people who entrusted us to manage their assets. All the products the group manages generated a positive return, and some were the best in their categories,” Invalda INVL President Darius Šulnis said.
Last year, he said, large forest and real estate sale transactions took place, thereby realizing part of the value created, earning a significant profit for investors and accumulating cash that they will be able to use in the current market environment. The INVL Baltic Forests Fund I had an average annual return of 27% for the last few years (EUR 20 million was paid out to investors in 2019), and that of INVL Baltic Real Estate was nearly 19% (EUR 20.4 million of dividends to investors were approved in 2020).
“Team’s professionalism and Invalda INVL’s long-term work led to the fastest in the market growth of the number of clients during the pension fund reform and a successful start of the INVL Baltic Sea Growth Fund, the largest private equity investment fund in the Baltic region,” Darius Šulnis said.
Invalda INVL’s revenue from the asset management business in 2019 totalled EUR 11.3 million. Despite extensive investments in growth of the asset management business and their negative effect on current operating results, in 2019 the company earned EUR 2.3 million from the asset management business.
“This year the main management priority is adapting to the new reality sparked by the coronavirus pandemic. First of all, we aim to preserve maximum value of the investments entrusted to us and, seizing opportunities, undertake new ones,” Darius Šulnis said. He also noted, that the INVL Baltic Sea Growth Fund intends to make significant investments this year. Moreover, capitalising on the team’s experience and historical success and considering market opportunities and needs, the start of a second fund to invest in forest and agricultural land is planned.
Investments
At the end of 2019, investments in products that the Invalda INVL group manages amounted to more than EUR 32 million, while the legacy investments totalled more than EUR 41 million.
“The value of Invalda INVL’s investment portfolio grew during 2019, with gains of EUR 17.8 million for the company. That result was influenced most by growth in the value of investments in Šiaulių Bankas, Litagra, Moldova-Agroindbank and INVL Baltic Real Estate,” Darius Šulnis said.
“We have a stated policy of investing together with our clients, thus seeking maximum alignment of the interests of investors and the general partner. We continuously increase such investments – with the final closing of the INVL Baltic Sea Growth Fund, the decision was made to invest a total of EUR 20.1 million in that fund, continuing Invalda INVL’s long years of activity in the area of private equity investments,” Šulnis said.
In his view, looking at last year and this year, the cyclicality of the economy is obvious, where times of growth are followed by more difficult periods, being replaced by growth again. We have entered a period of uncertainties and challenges during which a decrease in the value of some investments, with related losses, is highly likely. “For our part, we are prepared for such changes: we have a strong team of professionals and a sustainable business model, we do not have financial debt, and we have sufficient financial reserves. Moreover, the downturn is a good time to enhance and develop Invalda INVL’s asset management business, investing and seizing opportunities that arise in the markets, so that, once it is over, we are even better and stronger,” Invalda INVL’s president said.
The company’s published audited results will be approved at an annual general meeting of shareholders on 30 April this year. According to Darius Šulnis, the company’s activity and available financial resources permit paying out dividends of EUR 0.8 per share, for a total of EUR 9.3 million, to Invalda INVL’s more than 3 000 shareholders. “In the current complex environment, we want to give our shareholders a choice of whether to invest this money or use it for other needs and purposes,” the head of the company said.
Also during the meeting, a procedure is being proposed for realizing options granted to employees of the group in 2017. Additionally, approval of the signing of options contracts with employees of Invalda INVL group companies this year will be proposed. And as in previous years, a proposal is made to permit the company to buy back its own shares.
Invalda INVL, operating since 1991, is one of the leading asset management groups in the Baltic countries. The companies that the group owns in Lithuania and Latvia manage more than 20 mutual and pension funds (2nd and 3rd pillar), alternative investments, individual portfolios, private equity, and private debt financial instruments. At the end of 2019, the group’s companies had more than EUR 1 billion of assets under management, entrusted to them by over 200 000 clients in Lithuania and Latvia as well as international investors. The shares of Invalda INVL have traded on the Nasdaq Baltic securities exchange since 1995.