Fair attempts to quell investor’s stock market worries

The Baltic Times, TALLINN
Oct 26, 2000
By Kairi Kurm

It is amazing how few Estonians actually invest in the Tallinn Stock Exchange, although it seems that most businessmen are somehow involved in it.

The Tallinn Stock Exchange together with the business daily Aripaev and international news agency Reuters organized a fair called “Rahakompass (Money compass) 2000” in Tallinn on Oct. 20-21 to popularize the different investment opportunities in Estonia and raise interest in the equity market.

In 1997 the number of active investors, who made at least five stock transactions a year, was 7,000. Today the number has decreased to 2,000. According to Gert Tiivas, head of the Tallinn Stock Exchange, the aim of the stock exchange is to increase the number of investors to 25,000 by the year 2003.

“Many people say that stocks listed on the Tallinn Stock Exchange are not liquid enough because of the size of the market,” said Tiivas.

“The percentage of the Estonian population that is actively trading stocks is only 3 percent to 4 percent, while in Sweden, for example, it is 60 percent.”

He said that the rise in incomes and savings and the stability that comes with membership in the European Union should contribute to the increase in the number of investors in Estonia.

The aim of the fair, which took place in the Estonian National Library, is to improve the knowledge of different investment opportunities in Estonia and take away the fear of making the first transaction, said Tiivas.

“The fair was aimed at future investors – youngsters, students and those who have money but have not thought of investing it,” he said. “All the participants are very amazed at how many interested visitors we had,” Aadu Oja from Trigon Investment Management said.

To help promote investments the Tallinn Stock Exchange charged no transaction fees to member firms for transactions made by private persons on Oct. 20 and Oct. 23. Most firms passed the free trades onto their clients.

Also the Estonian Central Depository for Securities did not charge account operators the 75 kroon fee Oct. 16-27 for opening securities accounts. Some banks followed.

Minister of Finance Siim Kallas predicted that, based on how many people he saw attending the fair, a remarkable recovery in the investment business is underway.

“Most people keep their money on deposits, which is a very passive way of investments,” said Kallas.

According to Oja, Estonians keep about 14 billion kroons in commercial banks, 60 percent of which is on a time deposit that does not return revenue on interest.

“Most Estonians are very insecure in making financial decisions and make short-run plans mainly,” said Oja. “At present their interest towards stocks is low, and so are the local stock prices. I hope that they will get interested in investing soon, otherwise it will give a good opportunity for foreign strategic investors to come and take over the few good companies.”

Although Kallas suggested diversifying investment portfolios, he admitted that he had not invested in stocks himself.

“I am a theorist in this field. I have a principle that if someone is active in politics he should not deal with stocks, otherwise these two things could dangerously get mixed up,” he said.

Although Tiivas is managing the Tallinn Stock Exchange, he also confessed that he had so far not invested in stocks.

“Like most of the young people I spent my savings on studies, which is not cheap in the United States. I am also collecting money on a savings deposit in order to buy an apartment,” said Tiivas.

Oja said that he had invested most of his money in real estate and the rest of it he had placed in Trigon’s securities fund, which returned 49 percent revenue in 12 months.

Most of the top managers who were asked to promote their company’s shares admitted that they did not own the company’s stocks that they worked for and did not have any other stocks either.

Jaan Mannik from Eesti Telekom said that he did not have any Telekom stocks but he would like to motivate the company’s employees with it in the future.

Norma’s head Peep Siimon admitted that he hadn’t any Norma stock and wasn’t sure if he wanted any “because the company’s share price had nothing to do with the company’s welfare.”

“People should not hurry with getting rich,” Kallas warned. “Money should be placed in places where there is the biggest need for that and where it makes the biggest profit.”

“Money is the blood of an economy. If it moves fast and well, it will influence the health of the economy positively,” he continued.

Source: http://www.baltictimes.com/news/articles/3003/

ESVA fish fingers hook the Baltic market

The Baltic Times, TALLINN
Oct 26, 2000
By Kairi Kurm

ESVA Fish Production, the biggest fish finger producer in the Baltics, is an example of a company where expansion to the European markets will increase with Estonia’s membership in the EU. Although the company and its raw materials have all the quality assurances necessary to export to the Western markets, membership in the EU would save the company from paying high taxes on exports. “We do not have to pay customs duties, but export taxes on our products range from 15 percent to 40 percent,” explained Tauno Tats, chairman of the board at ESVA. “This means that we have to compete in unfair conditions.”

At present the company is concentrating on strengthening its positions in the Baltic markets. Two thirds of the company’s production is sold in the Baltics and 15 percent is exported to Finland. ESVA’s only competitor in the Baltics is a Lithuanian company Viciunai.

Tats believes that the rising prices of meat will promote the sales of fish products. “People are starting to understand how healthy fish products are,” said Tats.

ESVA has only about 10 big wholesale clients and a favorable location in Tallinn on the territory of the Port Paljassaare, which is also close to a railway network.

Besides its main product, fish fingers, ESVA also produces different kinds of fish burgers and snacks, breaded mussels and breaded cauliflower.

The history of the 10-year-old company is complicated. It was established in Tallinn in 1988 as a Soviet-Finnish joint venture to feed the whole Russian market.

But in 1992 the Finnish partner Valio abandoned its share. By 1993 the company went bankrupt because it no longer received cheap fuel and raw materials from Russia and for that reason was unable to pay a loan to Valio.

During bankruptcy proceedings in 1994-1995 ESVA worked at maximum capacity until it was bought by a small Norwegian company, Moon Holding, which improved the marketing side of the company. It was forced to lay off much of its workforce during the financial crisis in Russia.

In 1999 local food producer Osel Foods bought the company and became the biggest food concern in Estonia. Osel Foods, a producer of beverages and ketchup, now wants to list on the Tallinn Stock Exchange.

Today ESVA is the market leader on the frozen fish market in the Baltics, and its products are guaranteed by the Hazard Analyses of the Critical Control Points (HACCP) System, which allows it to export to all European Union countries. The fishery’s raw material, white fish like Alaska pollock, hake, blue whiting, is mostly imported from Iceland, Norway and EU countries. The 130 employees of the company work in two shifts. The maximum capacity of the fishery at present is 10,000 tons of frozen fish a year. The company’s turnover in 1999 was 92 million kroons ($5 million) but should reach 100 million kroons by 2001 thanks to a number of new products and lower cost of new local raw materials, said Tats.

“Until today the production was mostly oriented on mass production,” said Tats. “We used mostly ocean fish that was already partly preprocessed by our suppliers. In the future we want to start using local fish, which is much cheaper, and process it ourselves.”

At present ESVA has 15 different products and it runs at only 50 percent capacity.

“In the future we are planning to produce more products and raise the volume of production. There is a big disproportion between the volume of sales and the actual capacity,” said Tats. He said that although the cost of labor in Estonia is cheaper than in Sweden or Denmark, for example, the production of fish fingers is automated and does not require much manual labor. “If not in price, our products still have a lot of advantages. We do not use preservatives in our products, and the level of fat is very low, about 1.1 percent of the product’s total weight,” said Tats.

“If we were to invade new European Union markets, we would go there with totally different products that we already have prepared in our nomenclature,” Tats confirmed.

Tarmo Toomet from Balbiino, whose task is to market ESVA products, said that the sales of ESVA products is successful because Estonians are used to local products, especially when they have had it for a long time.

Source:  http://www.baltictimes.com/news/articles/3001/

Optiva Pank to become Sampo Pank

The Baltic Times, TALLINN
Oct 19, 2000
By Kairi Kurm

Starting January 2001 Optiva Pank, Estonia’s third largest commercial bank, will start operating under a new name – Sampo Pank.

According to Harmo Vark, Chairman of Optiva Pank’s management board, the name change is a logical sequel to the bank’s change in ownership last summer when Sampo-Leonia, one of the biggest Scandinavian financial groups, bought a majority share.

The Finnish Sampo-Leonia also owns the biggest non-life insurance company in Estonia – Sampo Eesti Kindlustus.

Sampo purchased a controlling stake in Optiva Pank from the Central Bank of Estonia last June that has increased to 93 percent.

The name change will also affect the bank’s leasing and property management subsidiaries, which will be called Sampo Varahaldus and Sampo Liising beginning next year.

In the first half of this year, Optiva Pank’s market share was about 5 to 7 percent. Its biggest competitors, Hansapank and Uhispank, control about 55 percent and 30 percent of the market respectively.

Olavi Laido, Sampo-Leonia’s head of the Baltic region, believes the name change will also contribute to the development and cross-selling of common products.

The headquarters of Optiva Pank and Sampo Eesti Kindlustus were the first two branches of the two companies to start with the sales of unified banking and insurance services. The same principle will be applied to all banking and insurance service halls of Tallinn, Tartu, Parnu and Narva during this year and at other places by next year.

Mika Vilkki, director of business functions at Sampo Eesti Kindlustus said the company has 15 offices in Estonia. Optiva Pank, meanwhile, has eight branch offices in Estonia, five of which are in Tallinn and the rest in Tartu, Parnu and Narva. Two joint banking and insurance offices will be opened at the new shopping centers in Tallinn in October.

Sampo Eesti Kindlustus has about 330,000 clients in Estonia, while Optiva Pank has about 29,200.

“Given that unified developing and sales activities reduce production costs, the client will be able to benefit from expanded choice options and, more generally speaking, the whole market situation will improve,” stated Laido.

According to Laido, Sampo-Leonia views the Baltics as their home markets and is planning to further expand to Lithuania and Latvia, where it already has a small market share.

“The group’s goal includes a position among the three biggest and most profitable Baltic financial groups by the end of 2005. In the field of insurance, Sampo-Leonia aims to achieve this goal by as early as the end of 2003,” said Laido.

“We want to become the best choice for a company which operates in all three Baltic states, so that the company will not have to deal with different institutions in each country,” said Laido.

Laido said that the company had been trying to buy big insurance companies in Latvia and Lithuania, but when they did not find any, they decided to move on by themselves.

“If we find something appropriate on sale, we buy it, if not, we have to do it by ourselves,” said Laido.

In Latvia, Sampo operates under the names Sampo Latvija and Sampo Latvija Dziviba (life insurance), both of which control about 2 percent of the market. In Lithuania, Sampo Lithuania operates in six towns and controls about 5 percent of the market.

Before the acquisition of the non-life insurance company of Hansapank and taking over the non-life portfolio of the bankrupt Polaris in 1999, Sampo’s market share in Estonia was about 5 percent as well. Hansapank’s Eesti Kindlustus, the oldest insurance company in Estonia, was the biggest non-life insurance company when Sampo acquired it. Thanks to the acquisitions, the Sampo Group grabbed nearly one-third of the Estonian non-life insurance market in 1999 and now holds about 40 percent of the market.

Sampo’s share of the lifeinsurance premiums in the Estonian market is about 2 percent and growing, said Vilkki.

“Of course, it would be much faster to buy a portfolio, but we decided to start this business ourselves,” said Vilkki.

Hansapank did not sell its life insurance company to Sampo when Sampo acquired Eesti Kindlustus and is now the market leader in the life insurance market. The other two big life insurance companies belong to Seesam and Uhispank.

Like Hansapank, Uhispank also sold its non-life insurance company Leks last year to the international insurance company BICO, which is now the biggest competitor to Sampo with 30 percent market share. Seesam, which controls more than 10 percent of the non-life insurance market, holds third position.

“The banking sector was not interested in offering non-life insurance services at that time, because it was difficult and it did not fit with the bank’s everyday business,” said Laido.

“We want to offer good services to our clients and become a good alternative to big banks,” said Laido.

Priit Potisepp, head of insurance company Hansapank Kindlustus, said that if Sampo Pank will take advantage of the synergy that comes from combining banking and insurance services, it will become very successful in Estonia.

“The experiences of Hansapank and Uhispank life insurance have proved this fact,” said Potisepp.

Sampo-Leonia is a new financial institution in Finland, which combines the biggest Finnish insurance company Sampo and the second biggest Finnish bank Leonia. The two companies decided to merge last October, but the merger will officially be concluded by the end of 2000.

Source: http://www.baltictimes.com/news/articles/2931/

Pro Kapital’s subsidiary will operate two hotels in Tallinn’s Old Town

The Baltic Times, TALLINN
Oct 19, 2000
By Kairi Kurm

Domina Management, a Pro Kapital company, is planning to establish two condominiums in the Old Town of Tallinn in the near future, one at the Town Hall Square and the other one on Vana-Posti Street.

Unlike typical hotels, rooms at the Town Hall Square will be rented out for longer periods than typical hotel rooms and will thus be sold under the brand name Domina Luxury Apartments.

Aare Jaanus, head of Domina Management, said that the target group for these new luxury apartments are representatives of foreign companies and embassies who want to stay longer than regular hotel visitors and shorter than tenants at ordinary apartment houses.

Hindrek Leppsalu from the real estate company Ober-Haus said that it’s difficult to predict the demand for the apartments, but admits that some clients have asked for rentals shorter than a year.

“Each tenant is related to a risk and the renter always wants to rent apartments out for a longer period. For some people it is an attractive alternative,” said Leppsalu.

Ober-Haus is a real estate company, which is also active in hotel business in Tallinn’s Old Town.

Jaanus said that the advantages of renting a room in their new residence is that it looks nice and has all the necessary services, including, security and fitness.

Jegorov’s Real Estate on the Town Hall Square, which will be completed by spring 2002, will include 57 apartments on a 6,880 square meter plot. The building belongs to Vegacorp, which will renovate it. Domina Management will then start operating it.

Domina will also operate Ilmarise Residence, another luxury apartment building on Vana-Posti 13, which belongs to the foreign company Armelinda and will be completed by August 2001. This building has 68 rooms on a 3000-square-meter area, which unlike the residence on the Town Hall Square will also be used as hotel rooms for shorter periods.

Ilmarise Residence, which was opened in 1999, is the only existing project of Domina Management at present and the only residence type of hotel in Estonia. It is a two-story building in a new residential area of Ilmarise. The residence with 49 rooms made 3.5 million kroons ($0.2 million) profit and its sales totaled 8.5 million kroons in the first eight months this year.

Jaanus said that the residence worked efficiently thanks to the outsourcing of employees and the strict cost control.

“Ilmarise was our first step in the Baltics,” said Luca Milani, chairman of the board at Pro Kapital Group and managing director at Domina. “The results after the one and a half years of operation are very successful, and we are looking for other opportunities.”

Pro Kapital acquired Domina Management shares for 5 million kroons earlier this month to expand its activities in the hotel business. Domina Management already operates ten hotels in Italy, Egypt and Africa.

Milani said that Domina Management operates four-star hotels in prime locations in different countries.

“If the hotel is in a warm country, it must have a view over the sea and if it is in a city, it must be in the center of the town,” said Milani. “Kenya is the biggest market for Italians, and Egypt is the biggest tourist destination in the world. But the Baltics are the future of tourism, I think,” said Milani.

Besides its activities in Tallinn, Domina Management is also opening a new hotel in the center of Vilnius in two months and is planning to establish 2 or 3 hotels in Riga soon. The hotel in Vilnius, which is located on Didzioji Street, has 24 rooms, which will be rented under the brand name Domina Luxury Apartments.

“We are also investigating the St. Petersburg market,” Milani confessed.

Source: http://www.baltictimes.com/news/articles/2928/

Estonian teens barred from the National Library

The Baltic Times, TALLINN
Oct 19, 2000
By Kairi Kurm

The National Library announced Oct. 10 that it will no longer admit children under the age of 16 due to financial problems. For the last four years the National Library has had to cope with the same 56 million kroon budget, which is not adequate to administrate the whole building.

The council of the National Library announced it needs at least 63 million kroons ($3.5 million) to survive. If the library does not get an additional 7 million kroons to the budget, some of its services have to be withdrawn and the opening hours of the library have to be shortened, the officials declared.

Tiiu Valm, head of the National Library, said that the library will also have to dismiss about 30 people. She also complained that the Minister of Culture does not provide enough resources to meet a 10 percent wage increase.

The budget shortfalls will also affect the services of hundreds of other libraries, which use the bibliographical and IT services of the National Library on a daily basis.

The council of the National Library announced formally that its target group is scientists dealing in social sciences and humanities. Specialists, university, college and high school students are welcome only in cases of concrete research.

There are three different types of libraries, each with its own functions, said Ene Loddes, director of library services at the National Library. She said that the tasks of a public library include satisfying the needs of people who live in the specific area, while the tasks of the National Library include preserving all kinds of literature and cooperating with libraries oriented in sciences.

Loddes said that if the network of other libraries worked better in Tallinn, the National Library would not have to deal with so many youngsters. She added that if the network worked better, children really interested in visiting the National Library would have gained access without any problem.

“It seems that the public and school libraries have not fulfilled their tasks well. The one and only National Library should not fulfill their functions,” said Loddes.

“Our personnel are trained for a different kind of target group. They know how to deal with specialists of different kind. Curbing children, for which they have not got any training, takes a lot of energy,” said Loddes.

The day after the announcement to close the doors to youngsters, the library received a record number of new visitors. According to Valm, 80 new visitors were registered on Oct. 11, while the average number of registrations is usually around 25 per day.

“Maybe they feel that it is better to work in the library since there are no noisy children around,” said Valm. She said that some of the visitors of the library are very positive towards the decision to close the doors to youngsters, while the media has taken a negative stand.

She said that administering to children is not the function of the National Library, since there are at least 100 children’s libraries and more than 20 public libraries in Tallinn.

Finnish and Swedish national libraries’ heads consider the decision to cancel admitting youth under the age of 16 to the National Library justifiable because the functions of the National Library are the preservation of culture and its availability for scientific research, BNS reported.

The United Nations Children’s Emergency Fund (UNICEF), on the other hand, declared that this is a violation of children’s rights and cannot be a valid reason for the library to close its doors to children. UNICEF declared that the decision violates the formal rules of the national library and UN Children’s Rights Convention.

Asser Jaanimets, representative of the Estonian Youth Center, said that if youngsters did not go to the library, they might start doing something worse.

“I go to the national library very often and the children don’t cause me any trouble. Usually the noisy ones calm down very fast. It is possible to put bad children on the so-called black list. It is not the students’ fault that the other libraries are of bad quality and they have to visit the national library,” said Jaanimets.

The representatives of different libraries are meeting on Oct. 19 at the Ministry of Culture to discuss the problem.

“I hope a solution will be found. At other national libraries the traditional system works well,” said Loddes.

Members of the Estonian Youth Center together with the Estonian Student Council are planning to picket in front of the national library and the homes of the council members on Oct. 19.

Source: http://www.baltictimes.com/news/articles/2905/

LHV Direct brings U.S. stock market closer to Estonians

The Baltic Times, TALLINN
Oct 12, 2000
By Kairi Kurm

Since Internet broker LHV Direct started trading with shares listed on the NASDAQ, NYSE and AMEX stock exchanges on Sept. 7, it is believed that interest in stocks traded on the U.S. stock exchanges may rise in Estonia.

LHV Direct is not the first broker to broker foreign stocks, but it is definitely the cheapest and, according to specialists, it may bring down the high prices of U.S. stock transactions in Estonia.

LHV Direct also offers financial news and comments from experts on its home page at http://www.lhvdirect.com. After integration with a popular news portal Delfi, the site is also available on http://www.delfi.ee page, which boosts the number of visits to the LHV Direct page.

According to Rain Lohmus, one of the owners of LHV Direct, there is no commission on trading U.S. stocks until the end of October and after that it will cost 199 kroons ($11) per transaction. LHV Direct is the first Estonian Internet broker, established six months ago by the firm Lohmus, Haavel & Viisemann (LHV).

Today the e-portal has about 300 clients, 100 of whom are active traders, said Lohmus. He said that when he was planning to establish an Internet brokerage he had to keep three things in mind that kept investors from investing. First, he said, local investors were not satisfied with the small diversity of stocks on the local market. Secondly, trading with foreign stocks was expensive, and the last but not the least obstacle was lack of knowledge of foreign markets.

“The U.S. stock exchange does not consist of U.S. stocks only. There are thousands of foreign stocks noted on the U.S. stock exchanges,” said Lohmus. “And there should be no fears about the transparency of foreign companies. There is more information on the Internet about American stocks than there is information about the Estonian stocks on the local market.”

Today, trading through LHV Direct comprises almost one fifth of the turnover of the Tallinn Stock Exchange and the number of transactions is almost 80 percent of the total number of transactions per day, said Robert Kitt from LHV Direct.

“In the past few days an average of 55 transactions in the volume of one million kroons were done each day,” said Kitt.

He said that through the local stock exchange one could trade only with about 20 different stocks, while their new service allows to trade with about 10,000.

Lohmus said that the most popular shares during the few weeks of their trading have been Cisco, Nokia and Ericsson. Securities specialists from other investment banks agreed that Scandinavian stocks such as Sonera, Ericsson and Nokia, which are also noted on the U.S. stock exchanges, are very popular among Estonian investors.

“Elcoteq, a leading European electronics manufacturing service company, which also has a subsidiary in Estonia, is popular in Estonia because people know it,” said Lauri Lind, director of capital markets at Hansapank.

At present Hansapank is offering one of the most expensive U.S. stock transaction services in Estonia, but Lind believes the prices will come down in a month or two.

At Hansapank there is a 0.5 percent commission on each transaction with U.S. stocks, with a minimum of $100. He said that in case of several transactions it is possible to get discounts.

Hansapank was also the first investment bank in Estonia, starting with intermediate Swedish and Finnish stocks in April 1999 and U.S. stocks some months later. Today Scandinavian stocks make up about 70 percent of the total number of foreign stock transactions at Hansapank.

“I believe that Estonians are investing more in the Baltic stocks than abroad, but the interest towards foreign stocks is increasing day by day,” said Lind. “I also believe that the cost of transactions with Western stocks will come down close to the price level of local transactions, which is 0.25 percent per deal or a minimum of 125 kroons,” said Lind.

Lind said that LHV offers a good service, but it could still be improved.

“At LHV clients have to transfer money to LHV account in advance but most clients do not like that,” said Lind.

Trading with U.S. stocks through Uhispank has a 0.5 percent commission, and a 300 kroon minimum.

Jaak Raivo, director of capital markets at Uhispank, said that U.S. blue chips, for example IBM and RedHat, are very popular among Uhispank investors. At present Uhispank investors hold about $400,000 worth of U.S. stocks and about 10 to 20 trades are made per day. At Hansapank about 10 transactions are made per day, said Lind, but it depends mostly on the news of the day.

Raivo said that although Uhispank’s service is a little bit more expensive, the length of the transaction itself might sometimes make for more profitable deals.

“At LHV the order is entered twice, once by the client and then by the broker. I do not know whether the client gets the share for the same price that he saw when he started the transaction or not. The time spent on the transaction can sometimes turn into a big loss,” said Raivo. “At Uhispank the client calls us, gets some advice on the phone and the transaction is done in five seconds.”

He believes that the clients of the bank are satisfied with their bank and lower prices will not make them go over to the competition. Unlike Hansapank, it is not possible to buy U.S. stocks through Uhispank’s Internet bank. Raivo said that there is no demand for these services at present and usually about 10 percent of all transactions that come in via the Internet are falsely entered.

The purchase of stocks through an investment bank Trigon Capital costs $30 per transaction. According to Kristel Kivinurm, head of the securities and brokerage department at Trigon, the cost of the service is not important when big transactions are made because each second is important.

“The clients of LHV do not get personal support from the broker. They should know the market; know what they want to buy or sell and when. In Estonia the number of people who know foreign markets is small,” said Kivinurm.

She said that the interest towards foreign stocks is constantly growing in Estonia because the opportunities to invest on the Baltic markets are limited.

“If the companies listed on the local stock exchange are taken over by foreign investors and other companies do not replace them on the exchange, we might find one day that most of the local money has gone abroad,” said Kivinurm.

Kivinurm did not want to disclose the number of foreign transactions made at Trigon Capital, because she believes that it is not an important issue compared to the volume of the deal.

Veikko Maripuu, an analyst from Suprema, said that due to the good quality of their services transactions with U.S. stocks cost 0.5 percent or a minimum of 500 kroons at Suprema.

He said that their services do not suit small investors well and more than half of the investments at Suprema are portfolio investments.

Like his competitors he claimed that an investor needs information from his broker when purchasing U.S. stocks.

“LHV Direct is a good place to trade when the client knows what he is doing. Estonians do not know the U.S. market well. They have a better knowledge of the Scandinavian market,” said Maripuu.

“At Suprema more than 75 percent of the sales come from transactions with Scandinavian stocks, mostly Finnish stocks,” said Maripuu.

He said that in general LHV has established a good service for which there is a demand in Estonia and which widens the investment opportunities of local people.

Source: http://www.baltictimes.com/news/articles/2894/

Uhispank offers discounts to former investors

The Baltic Times, TALLINN
Oct 05, 2000
By Kairi Kurm

Uhispank announced on Sept. 28 that it would provide favorable investment opportunities to all Uhispank shareholders who sell their Uhispank shares to the bank’s potential new owner, Sweden’s Skandinaviska Enskilda Banken (SEB).

SEB, one of the largest financial groups in Scandinavia, made a cash offer to acquire the remaining shares in Estonia’s Uhispank, Latvia’s Unibanka and Lithuania’s Vilniaus Bankas in the beginning of September.

SEB’s take-over bid to the shareholders of Eesti Uhispank was 41 percent higher than the actual market price of Uhispank shares at the day of the announcement, at 38 kroons ($2.11) per share. Estonian business daily Aripaev reported Oct. 2, that SEB has already purchased 66.58 percent of Uhispank’s shares.

Now Uhispank is offering a number of advantageous transactions to the previous shareholders of Uhispank in order to show its gratitude towards them.

“We want the relationships between us to be friendly up to the very end,” said Eero Raun, head of public relations at Uhispank.

He said he did not know whether the shareholders of Unibanka and Vilniaus Bankas would be offered similar deals, because Uhispank’s acceptance period for the offer started first. Uhispank’s offer lasts from Sept. 11 to Oct. 20.

The former private investors of Uhispank as of Sept. 8 have offered a 6 percent monthly interest on their average monthly deposit from Oct. 1 until Dec. 31. The average in Estonia is 1 percent.

Uhispank will also offer free brokerage services with Estonian shares until the end of 2000.

The contract fees of both children and retirement insurance will have a 5 percent discount, while discounts for risk and loan insurance may reach up to 15 percent of the contract fee.

Also, the interest rates of term deposits in the amount of 50,000 to 500,000 kroons are 0.25 percent higher, deposits exceeding 500,000 kroons are 0.5 percent higher.

Raun said the shareholders of Uhispank have showed heavy interest in selling their shares. He said the final results would be announced on the value date on Oct. 27, when money is transferred to the shareholders.

Raun said that SEB is planning to de-list Uhispank’s shares from Tallinn, Helsinki, Munich and Frankfurt stock exchanges.

“After that the shares of Uhispank will lose liquidity, and it will be very difficult to sell them,” said Raun. “It is wise to sell Uhispank shares now,” Raun suggested.

Source: http://www.baltictimes.com/news/articles/2727/

Finnish company takes over Estonian mobile positioning system developer

The Baltic Times, TALLINN
Oct 05, 2000
By Kairi Kurm

Finnish e-business solutions provider Digital Open Network Environment Corporation (Done) on Sept. 22 acquired, Regio, one of the most innovative companies in Estonia.

Regio is one of the world’s leading suppliers of positioning systems for mobile networks. According to the founders of Regio, the merger will enable improved marketing for the company’s product among the telecommunications giants.

The acquisition was executed through an exchange of shares, through which Done issued 789,285 new shares to the sellers of Regio in a direct issue.

Regio belonged to three Estonian private citizens, who established the company in 1990, as well as to American venture capital fund Baltic Small Equity Fund, which joined in 1998. Now the former owners of Regio have about 3 percent of Done’s share capital.

“We were looking for an investor in order to develop our competence in mobile positioning,” said Teet Jagomagi, chairman at Regio. “Done Wireless was looking for personalization and positioning services for WAP portals. They had already found a company that offered personalization services, and we accommodated them as a company to provide positioning services. Done, on the other hand, fit us as a company with an international network, enabling us to expand abroad.”

Kalle Heikkinen, Done board member, said that Regio complimented Done’s growth strategies, primarily in the business areas of wireless and information logistics.

“After the initial discussions both Regio and Done found that we will be stronger together. We plan to have several joint projects. Otherwise the companies continue as they are today,” said Heikkinen.

Regio will become a center for developing mobile positioning systems for Done and for this reason the company will be hiring 20 specialists for its Tartu office.

Regio, which initially started with map and navigation systems and systems integration, currently has 48 employees in Estonia.

“The cooperation will help us in selling our traditional products as well as to compete with our biggest competitors, who are six to nine months behind us in their technical developments,” said Jagomagi.

The main product of Regio is Enhanced Mobile Positioning Center, one of the most advanced positioning systems for GSM networks available. A positioning service of rescue calls, Rescue Board, is in testing phase in Estonia. Ericsson is one of Regio’s distribution partners.

Regio’s turnover for 1999 was 18.7 million kroons ($1 million) and its operating profit was 1.4 million kroons. For the year 2000, Jagomagi predicts a 22 million kroon turnover and a 2 million kroon profit.

Done’s consolidated turnover for 2000 is expected to reach a minimum of 60 million euros (936 million kroons). Done’s shares are also listed on the Helsinki Stock Exchange.

Done is a rapidly growing provider of comprehensive e-business solutions in both network and wireless environment.

Done’s strategic focus areas in wireless communication are mobile commerce solutions and applications and mobile software platforms for integrating personalization and positioning services.

With the acquisition of Regio, Done has 1,052 employees, 339 of which are located outside Finland, in the United States, Estonia, Great Britain, Sweden, Slovakia and Hungary.

Heikkinen said that Regio’s skill base would help the company in focusing on the global markets and he also confessed that as a stand-alone company it would have been more difficult for Regio to grow.

Jagomagi agreed that the cooperation enables the small Estonian company to reach big clients much faster.

Source: http://www.baltictimes.com/news/articles/2720/