H&M billionaires quietly move brands towards personal ownership

Hens & Moritz AB, a first fashion retailer listed on the Swedish stock market since 1974, has steadily returned to private ownership.

The founding family could bolster H&M stock purchases and spend more than 63 billion Kronors ($6.6 billion) since 2016, gaining nearly two-thirds of control, fueling speculation, and bringing the Stockholm-based company back to the hands of individuals.

Parsons, one of Sweden’s wealthiest families, has increased his shares through his holdings in Romsbury Invest, and has little to say about his intention to “believe” at H&M, founded by Ehring Person in 1947. The perfect media-fitting clan has reached a notable distance of retailer control. In recent years, it has lost its position among shoppers to “super-fast fashion” startups like its major rivals Zara and Shein.

“This is something we’ve been talking about for years and few people doubt that it’s the direction things are heading,” said Svere Linton, chief legal officer and spokesman for the Swedish Association of Shareholders. If the family doesn’t plan on making H&M private, he added that it should be more clear and that it should be stopped buying shares.

The family has bolstered insider purchases by reinvesting dividends, increasing H&M stock from 35.5% to almost 64% over the past nine years. According to the H&M website, Perssons controls about 70% of their capital and about 85% of their voting rights, including extended family holdings.

inInterviewLast year, along with Bloomberg, H&M Chairman Karl-Johan Persson (founder’s grandson) rejected the story that the family intended to keep the company private. “There’s no plan,” he said. “We just buy because we believe in the company.”

Representatives from Ramsbury Invest and H&M declined to comment.

Analysts, including Niklas Ekman of DNB Carnegie, say regular purchases could be more than a show of confidence in retailers. In a note to clients last month, he estimated that if the family continues to acquire shares at the same pace, the acquisition could soon be coming in two years. If the family holds 90%, you can request that the shares be abolished.

Take Private “is based on emotional motivation rather than financial motivation,” Ekman writes.

He promoted to Stephen Parson, 77, the 77-year-old Patriarch, who for over 20 years as CEO and chairman, built H&M on one of the world’s largest first fashion retailers for over 16 years. He is invested deeply in the future of the company.

According to the Bloomberg Billionaire Index, Stefan’s fortune is $18.6 billion, and he is primarily H&M stock, making him the wealthiest person in Sweden. He purchased the 3,000-acre Ramsbury Estate in 1997, then expanded to 19,000 acres, building a brewery, distillery and oil press.

After serving as CEO, his son Carl Johan, who chaired H&M in 2020, also has an active role in Ramsbury Invest. He expressed his frustration in an interview focusing on maximizing short-term profits in the stock market.

“In the modern era, at least they never expressed a strong desire to continue to be public,” said Daniel Schmidt, an analyst at Dunke Bank. “I think transparency has always been a part of it.”

H&M’s stock hit an all-time high about a decade ago, then fell by about 60%, valuing the group at 2200 billion Kronors. In contrast, Zara’s owner Inditex SA rose by about 60% over that period.

For Person, a stock price that sags the stock is undoubtedly frustrating, but it offers opportunities by making full control more achievable. At current prices, Ekman said, it would cost the family at least 70 billion Kronors to buy the remaining outstanding shares. It would likely require them to take on the debt.

According to Bloomberg Intelligence Analyst Charles Allen, delisting is likely to require premium as well.

“If a bid is funded by debt, it could reduce the flexibility of the company’s operations,” Allen said. “It really doesn’t matter whether the debt was liable to the company or family, as you have to divert cash flow from your investment to pay interest and then repay it.”

Operationally, first fashion retailers appear to be stuck in slow lanes, facing lukewarm demand for their apparel, fierce competition and current US tariffs. The first quarter results showed that efforts to drive customers back through higher marketing spending were weaker than analysts expected, without rebounding.

The CEO, a veteran of H&M who went on to look for the top job in January last year, is involved in setting the current strategy and has yet to reverse market share losses in countries, including Germany, France and the UK. Attempts to reconnect with younger audiences through collaborations such as pop artist Charli XCX have not significantly improved their growth.

Mads Lindegard Rosendal, senior analyst at Danske Bank, said: He said the potential risk of Take Private is one of the reasons Danske Bank has a “underweight” rating for H&M.

As one of Europe’s most short-circuited stocks, the acquisition allows short sellers to unlock negative bets on H&M and bring stocks to surge. As of June 4, the stock on the loan, which was 21% of H&M’s free float on June 4, was 21% of H&M’s free float, according to data from S&P Global Market Intelligence.

H&M has been criticized for lack of transparency over sudden management changes and for being the only company on Stockholm’s benchmark index that does not disclose the stock of its top executive team.

“Obviously being a publicly traded company will scrutinise management more than if they were private, but perhaps provides some incentives to other employees that are not available if it was private,” says Bi’s Allen.

Anders Oscarsson, one of Sweden’s biggest pension managers and the largest non-family shareholder, AMF’s stake manager, said he hasn’t heard anything about making H&M private.

“It would be sad if the company disappeared from the stock exchange,” he said. “If you’re generating returns from the stock market, you need to have a strong company listed.”

However, if family purchases lead to significant deterioration in stock liquidity, that is not a good result either. “It might turn out to be like Hotel California. You can’t check in or check out.”

This story was originally introduced Fortune.com