Two weeks ago, buyout fund giant EQT surprisingly announced that it had changed the holding period for central managers and partners, and how long they should hold their shares. The list of EQT shareholders is dominated by company people, and a lock-in agreement was struck to read the tops of the EQT to own the stock after the exchange was listed two years ago.
The surprise announcement two weeks ago opened the door for about 60 partners and managers to sell shares for up to SEK 23.3 billion (measured slightly in NOK).
The sudden change in the holding period for key EQT employees, and the massive downsizing, triggered strong reactions, and the price fell on the Stockholm Stock Exchange. Norwegians Christian Sending and Anders Messund are very focused on the EQT.
The Swedish financial watchdog, Finansinspektionen (FI), requested a statement from the company a week ago, and on Friday morning the FI announced it was now opening formal investigations into the company.
The new turnaround again causes EQT’s stake in the Nasdaq Stock Exchange in Stockholm to drop, and at the time of writing, the stock is down more than seven percent.
wait for weeks
Swedish newspaper Dagens Industri Books That EQT tasked its banks with investigating interest in buying insider shares as early as August 16, and the buyout fund company has already decided to wait for disclosure. The reason is that the immediate announcement would have negatively affected “the ability to reach the goal of changing the lock in a way that is good for the company,” according to the newspaper.
EQT Summits – led by Sinding and Misund – were able to say at the beginning of August that the share of EQT had risen 120 percent since the new year. Since the stock exchange was listed two years ago, the stock price at this time has more than fivefold.
On August 31, the EQT Board of Directors decided to accept the possibility of selling the company’s insiders earlier than the original lock-out agreement indicated.
Just one week later, after the exchange closed on September 7, EQT announced changes to the closing agreement and the mega sale. Later in the evening, it became clear that about 60 partners in the company had sold shares in the amount of SEK 23.3 billion. This contribution represents 11 percent of its total contribution.
According to Finansinspektionen, EQT may have violated important securities trading rules in the so-called European Market Abuse Regulation, March. Specifically, authorities are investigating whether EQT has had the opportunity to wait to report massive divestments and changing conditions for key employees of the fund for weeks, as they did.
After an initial analysis of the company’s response, the FI decided to investigate whether the EQT violated Article 17 and Article 18 in March, Finansinspektionen wrote.
In principle, all inside information, i.e. sensitive information about a company, should be released to investors and others as quickly as possible. However, there are exceptions to the regulations, for example if it would harm the company if the information becomes publicly known – as if the company is in negotiations for a major acquisition.
Misund and Sinding are EQT partners. Sinding is the senior manager at the buyout fund and Missond is Nordic’s manager. DN was in contact with Sindig on Friday morning. He does not wish to comment on the matter. Misund equally responds to the DN inquiry via SMS.
– We have noted the information from Finansinspektionen, and note that the dialogue continues. EQT insists the delay in publishing inside information was valid. Now it is important for the case to take its course. So we won’t comment on this further, says Director of Communications Ricard Buch in EQT to DN on Friday.
Sinding raised just over 1 billion crowns from the stock sale, while CEO Norden Misund sold more than half a billion crowns.
The decision to change the terms of the central acquisition managers received heavy criticism, including senior barrister Sveri Linton of the Swedish Equity Savings Association. He believed that the change to the original lock-out agreement damaged the reputation of both EQT and the market.
As an investor, you must be able to feel confident about the obligations the company has and that such incidents damage that confidence, both for the individual company and for the stock market, Linton told Dagens Næringsliv when the sale of EQT tops became known.
– I think it’s unfortunate. Lock-in agreements are a typical thing an investor sees when investing in a stock exchange, as it gives an indication about the current owner’s long-term perspective.
Then communications director Buch responded to the following criticisms:
Once again, we are always looking for ways to improve and develop an EQT ready to make positive decisions for both customers and shareholders. Locking out of the exchange listing simply didn’t do it’s purpose anymore and then we saw a reason to review it.
EQT invests in companies around the world through a number of different funds. The company has a market capitalization of SEK 400 billion and will be the second largest on the Oslo Stock Exchange – ahead of DNB and Telenor.
The stock market’s value has fallen by SEK 50 billion since its peak in early August. The largest owner is the investor who is dominated by Wallenberg with 17 percent of the shares. Investors have lost 16.7 billion Swedish kronor in value since the beginning of August. (Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.
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