Iceland launches Islandsbanki sale in push to clear 2008 crisis legacy
Bookrunners put a 20% stake in the lender on sale on behalf of the government on Monday in a process that would prioritise domestic retail investors. The offering could be increased to cover the full stake if investor demand is sufficient.
"There is a window of calm," Minister of Finance and Economic Affairs Daoi Mar Kristofersson told Reuters in an interview, referring to a break in recent global market turmoil hallmarked by trade tariffs and geopolitical uncertainty.
Shares are offered at a fixed price of 106.56 Icelandic krona - or a 5% discount over the average price of the last 15 trading days - to retail investors. Larger and institutional investors can bid in a Dutch auction with the minimum price matching that of the retail offering, the bookrunners said in a note seen by Reuters.
The sale is coordinated by Citi, Barclays and Kvika while ABN AMRO in cooperation with ODDO BHF, Arctica Finance, Arctic Securities, Arion Banki, JPMorgan, Landsbankinn and UBS are acting as bookrunners.
The Icelandic government had acquired 75% of the bank during the 2008 financial crisis, which roiled the country's banking sector and plunged the economy into recession. Its GDP now stands at $35 billion, according to the IMF, more than 60% higher than 2007.
The government sold part of its Islandsbanki stake in 2022, but there were complaints that it was not sufficiently transparent.
Kristofersson said he had seen significant interest in the share sale and that markets were positive towards Iceland despite global upheaval that often dents interest in smaller and emerging market economies.
"Although we were perceived as relatively more riskier than the U.S. in past turmoil, this time around, we are viewed as relatively safe compared to the U.S. market," Kristofersson said.
He added that U.S. tariffs would have minimal impact on Iceland – and its comparatively low 10% proposed level could even give it an advantage over neighbouring countries.
Additionally, he said that while significant house price increases were worrisome for citizens, the market "doesn't look bubbly at all", and the government was working to build more affordable housing and use the tax system to disincentivise short-term tourism rentals.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
9 minutes ago
- Reuters
Former Nokia CEO joining Finnish quantum company's board
STOCKHOLM, Aug 20 (Reuters) - Former Nokia ( opens new tab CEO Pekka Lundmark will join Finnish quantum computing company QMill as an investor and a board member, the company said on Wednesday. Lundmark stepped down from the top job at Nokia earlier this year after being appointed as CEO in 2020, and is credited with turning around the telecom gear maker. Antti Vasara, former head of VTT Technical Research Centre of Finland, and a former Nokia executive, will also join QMill as chair of the board. Espoo, Finland-based QMill, is a quantum-algorithm company, which started operations last year, and has raised seed funding from Antler, and Kvanted. Quantum computing is emerging as a promising sector where many startups are working alongside tech companies such as Microsoft (MSFT.O), opens new tab and Nvidia (NVDA.O), opens new tab to build functional computers to solve problems that would take classical computers thousands of years.
Reuters
9 minutes ago
- Reuters
China private equity secondary deals to surge on rising supply, cheaper valuations
HONG KONG, Aug 20 (Reuters) - Secondary trades of private equity assets in China are poised to accelerate after a robust first half, with Canada's No.2 pension manager and a China-focused buyout fund among those looking to divest such assets worth potentially billions of dollars, sources said. A private equity (PE) secondary trade refers to the buying and selling of PE fund portfolios or their direct shareholdings in private companies, allowing investors to exit their positions outside the typical investment cycle. The steep discounts being offered by the selling funds are expected to attract buyers who have confidence in China's longer-term economic prospects, industry sources said. Many of the selling funds have to repay their own investors and are struggling to find trade buyers or float the assets on public markets due to economic headwinds and geopolitical risks. Canada's Caisse de dépôt et placement du Québec (CDPQ), for example, which stopped making PE investments in China two years ago, is considering selling about $2 billion worth of assets via secondary trades, most of which are from China, said two people. China-focused buyout fund CDH Investments is also aiming to raise a multi-asset continuation vehicle to allow some investors to cash out from its existing fund's portfolio, they said. A continuation fund is a new investment vehicle created by a PE firm to transfer holdings of some existing investments, which allows investors to maintain or exit their stakes in the assets. CDPQ declined to comment. A CDH spokesperson did not respond to a Reuters request for comment. The people, who are familiar with the matter, did not wish to be identified as the talks are confidential. A total of 731 secondary trades involving yuan-denominated funds were completed in the first half of 2025, hitting a record 77.3 billion yuan ($11 billion) and logging an 89% year-on-year growth, according to Chinese data provider ZERONE. Data for secondary trades involving U.S. dollar-denominated assets in China is not publicly available, industry sources said. It is a good time for investors who have a long-term view on China to buy quality assets on the cheap with reduced regulatory risks, global alternative asset investor LGT Capital Partners said in an industry insight white paper published in July. "We expect the majority of capital we are going to deploy in China in the short to medium term to be via secondaries," Doug Coulter, LGT's Hong Kong-based partner and head of Asia Pacific private equity, told Reuters. LGT announced in June that it was the co-lead investor in continuation vehicles worth a total of $500 million for a portfolio of 13 assets managed by China-focused venture capital fund IDG Capital. LGT declined to disclose the discounts the assets were traded at. Singapore sovereign wealth fund GIC ( also invested in IDG's continuation vehicles, primarily buying shares of social media company Bytedance, said the two people. GIC declined to comment. IDG did not respond to a Reuters request for comment. Globally, secondary market deals have also hit record volumes, reaching $103 billion in the first half, according to a report by investment bank Jefferies, as the lack of capital distribution from IPOs and M&A deals fuels supply. Quality China assets are being sold in the secondary market at 40%-50% discounts to net asset value (NAV), said Coulter. That compares with the roughly 10% to 20% discounts to NAV for U.S. assets in the secondary market, industry sources said. The improved market sentiment in China should be conducive to PE secondary deals, industry sources said. China's onshore benchmark CSI 300 (.CSI300), opens new tab is up 7% so far this year, while Hong Kong's Hang Seng Index (.HSI), opens new tab is up 25%. "We believe the sentiment of investors about China has generally improved," said Mingchen Xia, managing director and co-head of Asia investments at investment management and advisory firm Hamilton Lane. He said that "the softened geopolitical tensions and largely settled tariff negotiations" by some major economies should give some comfort to investors.
Times
9 minutes ago
- Times
My hunt for growth left me blind to an investing slam dunk
When researching a topic, every so often I will stumble across something that will stop me in my tracks. It could be some golden nugget of information that I had never heard before, or perhaps a calculation that spits out a number I wasn't expecting. Last week, I had one of these moments when looking at the returns on investment trusts. Initially, I had focused on share-price returns alone. The Brunner Investment Trust, a global equity fund, had returned about 150 per cent over ten years, for example. The 3i Group trust, which invests in private equity, has returned a whopping 645 per cent. But then I looked at these trusts' total returns (the returns including dividends). The difference was staggering: the Brunner Investment Trust has given investors a total return of 222 per cent over the past decade, while the 3i Group trust has returned 938 per cent. It's not that I didn't understand dividends before this moment or hadn't looked at the yield on offer when it came to investment trusts, but I don't think I had quite comprehended just how much dividends can fuel growth over the long term. I admit that, as someone looking for capital growth over income, I had somewhat overlooked their power. Dividends are paid out by companies as a way to redistribute profits and reward shareholders. They are often paid quarterly and in cash, and companies typically use them to keep investors happy and to entice new ones. Companies that choose to retain their profits and reinvest in the business, instead of dishing it out to shareholders, tend to be known as 'growth stocks'. Investors who opt for growth stocks are more focused on capital growth over time than money today. As an investor, you can get dividends by holding shares in companies that pay them, or by investing in a fund or investment trust that invests in dividend-paying companies. • Dividend tax to affect record 3.7m investors after allowance cut Those looking for an income may have their dividends paid into their bank account (this is particularly popular for those in retirement), but you can also opt to have your dividends reinvested — each time a company pays out, your own investment in that company gets topped up. And this is where they can really help to boost your portfolio. 'Even if you don't need the income, dividends can be a fantastic way to compound returns if you reinvest the dividends and take advantage of pound cost averaging. Reinvested dividends can make a huge difference to the overall value of your portfolio,' said Helen Bradshaw from the wealth manager Quilter. Pound cost averaging is when you buy shares regularly, which averages out the cost of the shares, and helps to smooth stock market volatility. Susannah Streeter from the investment platform Hargreaves Lansdown said: 'When it comes to building wealth, dividends can be a powerful ally, especially if they accumulate over the long term.' Sums from Schroders, the fund manager, show the impact that dividends can have. Say you invested £1,000 in company A and £1,000 in company B. Company A's share price goes up 5 per cent a year — happy days — and has a dividend yield of 1 per cent. Company B's share price goes up 3 per cent a year but pays out a 5 per cent dividend. If all dividends were reinvested your holding in Company A would be about £3,240 after 20 years, but your holding in Company B would be worth nearly £4,800. Unfortunately for investors trying to pick a stock it's not simply a case of closing your eyes and pointing at the highest yielding company. A company's dividend yield is calculated by dividing its dividend in pounds and pence terms by its share price. For example, if a business paid out 50p a share in dividends and its share price was £10, it would have a dividend yield of 5 per cent. This means that an investment with a high dividend yield could simply have a weak share price. In this scenario, it is likely that the dividend payment is too high and the market has already priced in that it will be cut in the future. Any fall in the share price would also automatically raise the dividend yield. If we use the same numbers as above, if the company's share price dropped to £8, its 50p per share dividend would give it a yield of 6.25 per cent — but not for a good reason. Richard Hunter from the fund platform Interactive Investor suggested looking at dividend cover to see whether a dividend payout was sustainable. Dividend cover is a ratio of how many times the available profits can cover the total dividend payout. A number of 1.5 or above, meaning the profits are 1.5 times dividends, is considered a comfortable level. As a general rule of thumb, a 'good' dividend is in the ballpark of an average savings rate on cash — today, that's about 2.4 per cent. By comparison, the FTSE 100 (the UK's main stock market) has an average dividend yield of about 3.3 per cent, while the S&P 500's average (the US's equivalent) is about 1.2 per cent. James Burns from the advice firm Evelyn Partners said: 'The UK is generally a good place for those seeking dividend income as it has many sectors that are highly cash generative. Oil companies, tobacco stocks and insurance companies have all been popular with income investors.' In terms of dividend-paying stocks, Streeter recommended National Grid, which has an expected dividend yield of 4.5 per cent, and Legal and General, which is set to pay about 8.4 per cent. NatWest has a forward dividend yield of 5.4 per cent. I only have one strong dividend payer in my portfolio: Mitsubishi Financial Group, a Japanese banking institution that pays 2.74 per cent. The rest of my investments barely reach 1.5 per cent. My new-found respect for dividends isn't going to overhaul my investment strategy or prompt me to sell any holdings, but next time I choose a new investment, I'll certainly pay slightly more attention to the yield (and dividend cover) on offer.
