One of the most exciting highlights for Proventus in 1988 was the contact made and agreement signed with KOP, Kansalis-Osake-Pankki, and its representatives.
The background to the agreement with KOP was as follows:
GotaGruppen had already been established. ln our opinion, the group had the correct structure for the Swedish market but lacked a solid foundation internationally. Proventus was a major owner of the group, with 43 percent of its stock. Our goal was to cut down our interest in order to diversify investments, free resources for other deals and avoid becoming synonymous with GotaGruppen.
Analyses we made of potential partners to GotaGruppen all pointed in one direction: Finland. Norwegian banks generally were less suited, the Danes too different from us “culturally,” and Sweden offered no conceivable partner in our judgment. Cooperation between Finland and Sweden was – and is – very expansive. Doors between us and KOP were opened immediately. KOP realized the growing necessity of including Sweden as part of its domestic market and needed access to a larger network of branches. Its only Swedish “outpost” at the time was a single branch in downtown Stockholm.
In the same way that Proventus analyzed Finnish banks, KOP looked at its alternatives in Sweden. Of the other major commercial banks, S-E-Banken already had a cooperative agreement with Union Bank of Finland, PK banken was not in the running, and neither was Handelsbanken, whose agreement with KOP had recently ended. GotaGruppen was therefore the natural choice. Although the cooperation between GotaGruppen, KOP and Proventus was very complex, it was completed very quickly and without leaks thanks to the personal trust developed between the managements of KOP and Proventus. As agreed, the Finnish parties led by KOP, together with Proventus, became owners of Proventus Nordic AB, the Finns with a 40-percent interest and Proventus with a 60-percent interest. Also as part of the agreement, KOP issued Proventus news hares for SEK 300 million, making Proventus KOP’s second largest stockholder with two percent of its shares.
In Proventus’ judgment, all three parties benefited from the deal. GotaGruppen aligned itself with a very strong partner with internationally diverse operations. KOP obtained access to a large network of branches in Sweden and a partner with a wide range of financial services. Both KOP and GotaGruppen’s companies could benefit from joint ownership in such areas as training, computerization and clients. For Proventus, the KOP agreement provided an opportunity to realize a large surplus value in its Gota shares without having to give up majority ownership in GotaGruppen, at the same time that GotaGruppen gained a strong partner. Gota’s stock price in April was around SEK 80 per share, and the value of the total package for Proventus around SEK 150 per Gota share. We feel that an investment in Gota did offer good potential. KOP and its representatives obviously agreed, having acquired a strategic role in the Gota project.