Heimstaden - comment

Earlier this month, Heimstaden AB divested 100% of Heimstaden ehf., the entity that owned 100% of their Icelandic assets to Fredensborg AS (entity controlled by its main shareholder). Bloomberg are now reporting that Fredensborg has reached a deal to sell the entity on to an Icelandic asset manager, Stefnir hf, but no financial details are disclosed.  

The timing, less than two weeks from the initial sale is very strange and implies that the asset was pre-sold.  Heimstaden does benefit from a performance-based earn-out element depending on the exit price achieved by Fredensborg for the entity.  However, the two-stage sale seems to only benefit Fredensborg at Heimstaden AB’s cost.  We are not confident in the full value of the deferred element.

An alternative view is that Fredensborg have some connection to Stefnir and are providing them with the money to do the transaction, but enabling Fredensborg to achieve leverage from other investors in Stefnir for the same control.  

All of this is speculation, but the transaction is not positive from a governance point of view and bodes negatively across the Heimstaden entities.