Icelandic financial advisory business GAMMA Capital Management has received authorisation from the Financial Conduct Authority to carry out investment business in the UK, according to a statement from the firm.
The firm becomes the first Icelandic player to operate in the UK since the global financial crisis.
GAMMA was established in 2008, manages equity, fixed income, private equity and real estate funds. It has around £600 million in assets under management and 15 active funds, five of which are actively involved in private equity and private real estate, chief executive officer Gisli Hauksson told Private Equity International.
Of its assets under management, £200-250 million is dedicated to private equity and private real estate in funds ranging from £25 million to around £80 million in size.
The majority of investors in the funds are Icelandic, split evenly between institutions, including pension funds and insurance companies, and high net worth individuals, Hauksson said. Some international investors are also committed to GAMMA funds.
GAMMA also acts as an advisor on private equity transactions, including restructurings and listings.
Prior to 2008, several Icelandic banks operated in the UK, including its three largest banks, Glitnir, Landsbanki and Kaupthing. In 2008 Iceland’s banking system was taken over by the government after these banks ran out of money.
“There has been a lot of activity in that market in Iceland over the last few years, since after the economic crash in 2008 a lot of companies went into restructuring and were taken over by the banks,” Hauksson said.
“The banks have been gradually selling those assets off their balance sheets, and a lot of private investors and institutional investors have come in as equity holders instead of the banks.”
Following the crisis Iceland imposed capital controls to slow the flight of capital from the country. These controls also limited the Icelandic pension sector to investing only in the domestic economy.
In 2015 GAMMA opened an office in London in anticipation of the Icelandic government lifting these controls, which it has begun to do over the last year.
“Whether it’s institutional investors like pension funds or high net worth individuals, 90 percent of their assets are [Icelandic krona],” Hauksson said. “That’s going to change dramatically over the next few years, it’s probably going to be closer to 60-40, 60 percent Iceland and 40 percent international. A lot of investors are looking forward to investing abroad.”
Hauksson said that GAMMA would be targeting “at least” a 60-40 split between Icelandic and international investments, and that it would likely be even higher in favour of international investments.
“Our plan is to grow in London over the next few years and not just focusing on Icelandic business but on business in general,” he said, adding that although GAMMA will be investing opportunistically, it is likely to focus on Europe and predominantly the UK in the first instance.
Hauksson noted that the exchange rate for Icelandic krona to sterling has dropped from around 200 krona to the pound at the beginning of the year to less than 160, offering good opportunities for Icelandic buyers.
“We’ve seen, for example, in the high-end real estate market prices going down 10-15 percent, so for an Icelandic big investor I think it would be an ideal opportunity to look at investments in the UK at the moment.”