The Norwegian Government’s objective with their investment in Argentum Fondsinvesteringer (hereby referred to as Argentum) is to contribute to Norway’s industrial development as well as have a positive impact on the community and environment through substantial direct returns on investment. We emphasize that our operations are to be conducted in a profitable, respectable and sustainable manner.

Argentum aims to promote innovation and raise innovation levels through the further development of the Norwegian private equity industry. The company’s investment in minority shares in private equity funds allows the government to assist in the development and supply of capital to the Norwegian economy. Our efforts to achieve this objective have been successful.

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Argentum's investment strategy

Argentum indirectly contributes to the reconstruction and growth of knowledge-intensive businesses through investments in private equity funds¹, which include substantial investments in unlisted private enterprises. As an investor and leader of an established consortium of investors, the Nordic Private Equity Program or NPEP, Argentum helps to ensure that Norwegian and international risk capital is allocated to the fastest growing companies in Norway.

Prior to investment decisions, Argentum analyses the experience and documented results of the relevant fund manager and compares them to the Nordic and international private equity industry as a whole. Argentum operates with a set of requirements that ensure we only invest in fund managers who have defined ethnical guidelines, management and reporting routines as well as experience within project development. The aim of achieving profitable development of products/services, processes, expertise and markets requires close cooperation between fund managers, entrepreneurs, business leaders as well as employees.

Argentum’s fund managers shall not invest in companies where there is a risk of serious violations of the principles that are embodied in Argentum’s ethical values. Argentum will, if possible, terminate any business relationship we may have with the relevant fund(s) should any such serious violations be revealed or if we consider there to be a significant risk for such violations. So far none such above mentioned cases have been revealed. However, we consider the risk of ethical guidelines violation to be considerably low as the majority of our fund managers primarily invest in Nordic knowledge and technologically- intensive industry companies. 

Investments in high growth companies  

Private equity-owned companies account for 3.3 percent of total value creation (the sum of wages and profits) amongst Norwegian market-oriented companies (1), and research shows that those companies that receive private equity investment are rejuvenated and experience more growth than other companies(2).

Value creation by private equity-owned companies is superior to value creation by companies owned by other types of investors such as corporations, foreign owners or private persons (3). Similar surveys conducted in the UK support the above findings. Between 2000 and 2005 the number of employees in private equity-owned companies increased five times as much as equivalent public listed companies(4). 

Why is this so? Surveys conducted on British companies show that 75 percent believe they would have experienced less growth without private equity funds as owners(5). The main reasons cited are that private equity funds contribute, amongst other things, with strategic guidance, recruitment of leaders, experience, competence and extensive networks in addition to risk capital.  

Menon Business Economics, an economic analysis company, has found that Norwegian companies that have been wholly or partially acquired by funds that are part of  Argentum’s sphere of influence have an annual sales growth of 29 percent, compared to a national average of 19 percent for comparable companies that are not owned by private equity funds(6). Companies associated with Argentum can also show higher employment growth. The annual employment growth for Norwegian Argentum-companies is 18 percent, compared to a national average of 3 percent.  

Strengthening the private equity market

One of Argentum’s most important tasks is to mobilize capital from private investors to high growth companies. Argentum’s strength does not lay exclusively in our equity capital, but also our position as a credible Nordic private equity specialist operating within the financial market.

Our position in the market has permitted us to establish a comprehensive co investment, the Nordic Private Equity Programme. Our co-investment partners include Gjensidige Insurance, ConocoPhillips Pension Fund and the Varner Group.

Argentum has invested a total of NOK 2.1 billion in Nordic funds, which in turn have invested NOK 5.2 billion in Norwegian growth companies. We expect our funds to invest a further NOK 15 billion in the coming six to seven years. Nearly half this amount is expected to come from private equity funds that are headquartered outside Norway.

Adapting with good and resourceful owners

An important part of Argentum’s corporate social responsibility is to ensure that Norwegian growth companies receive professional owners who are knowledgeable, experienced and can give access extensive networks. In order to achieve these goals it is imperative Norwegian enterprises and Norwegian private equity funds invest both in Norway and the rest of the world.   

Research, development and competence structuring

Argentum invests in both venture funds and buyout funds.

Empirical studies have shown that venture fund investments contribute more to research and developed, through larger investments in these areas, than comparable investments from other types of investors(7).

What is more, Strömberg et al. have proven that companies owned by buyout funds have a higher degree patent registration than equivalent companies owned by other types of investors(8).

A number of Argentum’s portfolio companies have commercialized products and services from Norwegian research and development institutes. Profiled examples include, Wema, Scandinavian Petroleum Technology and Nacre.  

Environment 

Argentum is, through its funds, an indirect owner in a number of companies that develop and commercialize Nordic environmental technology. As a signal investor and driving force for the development of the Nordic private equity industry and knowledge intensive industries, we strengthen the supply of capital to research intensive companies, and also to environmental technology companies. A few Norwegian examples to mention from our current portfolio are investments into Innotech Solar, Crusin (renewable melting pots for solar energy), Chapdrive (wind turbine technology), Cubility (environmentally friendly recycling of drilling fluids), Ecowat, Pure Process (cleansing of water for oil and gas operations), BecoTek (brass cages for the ball bearing for wind turbines), SmartMotor (technology for tidal water energy and wind energy) and Wema (NOx – catalyst technology for vehicles).

Gender equality

It is stated in our ethical guidelines and work environment requirements that: “Argentum is to be a good and professional workplace where equality and mutual respect among employees are emphasized”. Three out of five of our board members are women, and four out of the company’s fourteen employees are women.

Health Safety and Environment (HSE)

The company has a HSE representative and a personnel safety representative. Each work station is individually adapted each individual’s needs. In the fall of 2007, a work environment survey was conducted which concluded that Argentum had a good and satisfactory work environment.

Business ethics and the work against corruption

Argentum works towards greater awareness for business ethics issues amongst their fund managers through representation in different committees, boards, etc.

As a significant investor, we focus on negotiating and establishing thorough ethical commitments and conditions in all our investment agreements, and allocate a significant amount of resources to help regulate the industry, ensure equal treatment of owners and transparency in the Norwegian private equity industry.

Through these extensive agreements we ensure that incentives are regulated and that all parties have equal rights and duties. We strive for openness in our decisions and we only invest in solid legal structures. Procedures have been established to counter money laundering at all stages of payments, and detailed documentation is obtained from all involved investor structures.