Pensioners lost half a billion on the giant’s gamble

Pensioners lost half a billion on the giants gamble

After the bankruptcy, Cake’s electric motorcycles are now sold for a pittance online. In the store, the bike cost SEK 40,000 or more. In auction after auction, they are said to cost barely a quarter of the price.

But that discount is nothing if you compare it to what the Norwegian car dealer offers Espen Digernes company Brages bought the entire company for – SEK 18.1 million.

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“Billion-dollar company” a real irritant for AMF

Cake was on paper one billion dollar company just a few years ago. Someone who went for the completely incorrect valuation was AMF – one of Sweden’s pension giants and large insurance companies. They invested 200 million kroner in the company early on.

If the company would only be worth as much money as the owners put in, roughly SEK 720 million, then the SEK 18 million would correspond to 2.5 percent of the value.

Paid 40 times too much

A healthier, but sadder perspective, is to describe it as that AMF and the other major owners went in with 40 times more money than what the company was actually worth.

When the company recently asked for more money from investors, AMF was one of the few who opened the wallet. All in all, the pension administrator put SEK 460 million into the company – which was declared bankrupt in February.

It appears from Dagens Industris disclosure.

The losers: The pensioners

And the losers are all the AMF customers who could have otherwise benefited from the money in the form of insurance benefits and pensions.

But AMF was ready to put in even more money.

– Cake had an exciting solution, but the risk capital was obviously not there. We were prepared to invest more money, but were alone all the time and that’s why we stopped, said the equity manager Anders Oscarsson to Today’s industry.

Unlisted company

Cake was not a listed company on the stock exchange. This means that the market value becomes more difficult for the owners to estimate than if the shares can be bought and sold on the market.

But there is one more piece of the puzzle: The purchases were made in the form of loans. And AMF was able to borrow money almost for free at the time.

The interest rate was zero

– When we put the first money into Cake, the interest rate was zero. We will not invest in growth companies that can only survive in a zero-interest rate situation, today we have a significantly higher return requirement, said equity manager Anders Oscarsson.

After the sale to Norway for 18 million, the debts in the bankruptcy estate amount to AMF’s half a billion, a traditional bank debt to the big bank SEB of SEK 76 million, as well as unpaid salaries to employees and invoices to subcontractors that it turned out that they could not pay in January.

Read more about pensions and finances:

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