The Board of Invalda LT, AB, one of the major Lithuanian investment companies, is seeking to receive delegation of Company’s shareholders to prepare split-off terms allowing the Company to concentrate on asset management business.
The shareholders meeting will be held on 5 February.
Upon the approval of the shareholders, three to four companies which manage homogeneous assets and which are planning to separate from Invalda LT, AB, will be applying for closed-end investment company licenses. It is assumed that they will be applying for the strictest regulatory regime which is imposed on retail investors.
“This will be the first step reorganizing Invalda LT. It is expected that shareholders will give the permission to prepare the split-off terms and later will approve the proposed split-off terms. As it was announced earlier all the Invalda LT, AB shareholders (over 4.2 thousand), will proportionally own shares in the separated companies. All the shares of the newly established companies are planned to be quoted on the NASDAQ OMX Vilnius Exchange”, – Darius Sulnis, the president of Invalda LT, said.
Preliminarily the first few investment companies will operate in the agricultural land sector, real estate sector and IT sector. “It is expected that after receiving their licenses all these companies will raise additional capital thus increasing the liquidity,” – Darius Sulnis, the president of Invalda LT, said.
One of the main reasons to implement the reorganization is that the company’s capitalization is usually lower than the total value of the separate assets because investors cannot predict sectors where investments will be made.
The reorganization will allow investors to select the asset or business in which they would like to invest. “The investors will be able to select the risk level as well as the term of the investments. By licensing the activities and being under the supervision of the Bank of Lithuania, there will be an increase in transparency and reduction in investment risk,” – Mr. Sulnis said.
The agricultural investment company will be created on the basis of 17 companies (altogether they own about 3 thousand hectare of land) owned by Invalda LT, AB. “We think that the agricultural land in Lithuania is one of the most undervalued in Europe. Long farming traditions and increased efficiency allows expecting the increase of both rental income and land price”. – Mr. Sulnis said.
The real estate investment company should be created on the basis of currently operating company Invaldos Nekilnojamojo Turto Fondas, AB. At the present Invalda LT group owns real estate objects in Vilnius and Kaunas with the total area of 50 thousand square meters.
“We think that the recovery of the economy will increase the real estate prices which shrank due to the crisis. Also we expect to create value investing into readjustment and development of owned real estate objects and acquiring the new ones”. – Mr. Sulnis said.
The first investment of the IT investment company would be 80 percent of shares in BAIP Group. This group currently owns companies in Lithuania, Norway and Tanzania. Moreover, it has implemented projects in more than 50 countries.
“Lithuania is the exporter of the IT services. Many start-up and mature companies’ business models are suitable for the international markets and growth of value”. – Mr. Sulnis, said.
Invalda LT, AB will concentrate on asset management business and will seek to receive the main income from the management activity. There are plans either to establish new management company or to acquire such company which already has a license of the Bank of Lithuania.
The implementation of the planned asset management changes will depend on the decisions of the Shareholders Meeting and the Bank of Lithuania. Therefore, there is a possibility that the reorganisation of a part of it may not happen or the structure of the proposed reorganisation may change.