The Persson family, one of Sweden’s wealthiest clans, has made quite the splash in the fashion world. Since 2016, they’ve poured over US$6.6 billion into H&M, claiming nearly two-thirds ownership of the brand. This move has sparked lively speculation about a possible return to private ownership, even though the family asserts otherwise, as reported by Bloomberg.
Increasing their stake through Ramsbury Invest, the Perssons have offered minimal insight into their intentions, merely stating their unwavering belief in H&M.
Despite their denials about taking H&M private, their steady accumulation of shares is raising eyebrows among minority shareholders. “This is something we’ve been discussing for years, and few would doubt that this is the direction things are headed,” remarked Sverre Linton, chief legal officer and spokesperson for the Swedish Shareholders’ Association.
Linton urged the family to clarify their intentions and consider halting their share acquisitions if they truly aren’t planning a switch to private ownership.
Thanks to reinvested dividends, the Perssons have inflated their H&M stake from 35.5% to nearly 64% over the past nine years. When considering extended family holdings, the Perssons command about 70% of the capital and roughly 85% of the voting rights, according to H&M’s own website.
In an interview with Bloomberg last year, H&M Chairman Karl-Johan Persson, the founder’s grandson, brushed aside rumors of privatization, asserting, “There are no plans. We just buy because we believe in the company.”
However, competition is heating up, with H&M wrestling against heavyweights like Zara and the rapid-fire fashion disruptor Shein. Last year, this iconic Swedish brand, nearly 80 years in the making, dropped its margin targets for 2024 as higher discounting, increased costs, and stiff competition eroded their operating profits, as Reuters reported.
Analysts, such as Niklas Ekman at DNB Carnegie, speculate that the family’s ongoing share purchases might signify intentions that extend beyond mere confidence. In a recent note to clients, he indicated a buyout could materialize within two years if the family’s current pace continues, with the potential for a delisting after reaching 90% ownership.
Ekman mused that a transition to private ownership would likely stem from “emotional rather than financial motives,” given the family’s existing dominance and historical penchant for prioritizing their vision over that of minority shareholders.
At the heart of this drive is Stefan Persson, 77, who transformed H&M into a global fast-fashion behemoth during his 16-year CEO stint and subsequent two decades as chairman. He remains heavily engaged in the brand’s future. With a fortune of $18.6 billion, largely in H&M stock, he stands as Sweden’s wealthiest individual, according to the Bloomberg Billionaires Index.
As H&M’s shares have plummeted by about 60% since peaking a decade ago, the company now holds a valuation of around US$23 billion, a stark contrast to its former glory.
What is the Persson family’s current stake in H&M?
The Persson family’s stake has risen from 35.5% to almost 64% over the past nine years, giving them control of around 70% of the capital.
Why are minority shareholders concerned?
Their concerns stem from the family’s ongoing share purchases, which some believe could indicate intentions to take H&M private, despite family denials.
How has H&M been performing recently?
H&M has struggled against fierce competition and has dropped its margin targets for 2024 due to increased costs, higher discounting, and declining operating profits.
