Business

Europe’s little known family with a network of investment businesses

In mid-February, Thyssenkrupp rejected a bid for its elevator division by its competitor Kone of Finland, a rare rebuff for its backers, the Ehrnrooth family.

But the Ehrnrooths are as lucky as they are patient and disciplined. After opting for a rival bid, Thyssenkrupp’s share price halved in the recent market crash, while Kone was spared the integration. Its shares only edged off an eighth. 

Few parts of the Finnish corporate scene remain untouched by the Ehrnrooths…

Members of the Ehrnrooth family have played a big role in creating Nordic champions in banking, paper, insurance, telecoms, engineering, consulting, publishing and private equity. 

They are well known to Finnish investors, given their involvement in listed companies, but beyond its borders, they run some of the best family businesses you have never heard of. 

One reason for their anonymity is that family activities are disparate. According to an individual who knows them well: “The Ehrnrooths do not form one sphere of influence. They do not think of themselves as one business family.” 

He said comparisons with the more centralised Wallenberg family of Sweden should not be pushed too far.

The Ehrnrooths have also put together separate charitable foundations and many family offices.  A new generation is making an impact in the arts as well as tech-driven VC but rarely talk about their family ties. By and large, members of the family have avoided controversy. 

The Ehrnrooths have been prominent in Finland since the 17thCentury. Their success in business reflects a willingness to take a long view as well as carefully calibrated bets on cross-border deals.

Their original family name was Plagman. They came over to Finland from German Pomerania in 1600. Johan Plagman was raised to the nobility in 1687 and the family’s title was registered in the Finnish House of Nobility in 1818. 

The name Ehrnrooth is a term for “military honour” and the family have frequently held senior positions in the armed forces.

In the second half of the 19thCentury, Johan Casimir Ehrnrooth served in Russia’s Imperial Army, where he put down a string of rebellions. At the Tsar’s request, he became Prime Minister of Bulgaria, then Russia’s secretary of state for Finnish affairs, although he became unhappy with a drive for Russification.  

Gustaf Ehrnrooth served in Finland’s struggle for independence, becoming a major general in the Finnish army. Following Finland’s independence in 1917, Adolf Ehrnrooth led skirmishes against the Soviet Union and pursued an active military career until 1965. He was a keen backer of moves for European Union membership.

The Ehrnrooth family went on to develop their taste for commerce, concentrating efforts on their native land.

Their success rate reflects their success in building market share for different companies in an economy which grew quickly after the war. 

Few parts of the Finnish corporate scene remain untouched by the Ehrnrooths, who take a pragmatic view of whether deals are worth pursuing. Its members invest each business for the long term, taking board positions as needed. 

Göran Ehrnrooth, born in 1905, set the pace at Union Bank, which went on to merge with a series of Nordic banks to become Nordea, based in Helsinki. He consolidated his influence by marrying Louise von Julin, sister to influential businessman Jakob von Julin. 

Nordea is 20% owned by Finnish insurer Sampo which owns Mandatum Life, originally an Ehrnrooth business.

Göran Ehrnrooth also ran an oil business called Petko, later sold to BP. He was involved with paper companies, notably Kaukus. 

His eldest son Casimir became chief executive at Kaukas and pushed through its merger with Kymi, a rival. He remained at the company, renamed Kymmene Corporation and later bought by its larger rival United Paper Mills in 1996. 

This series of deals made Casimir influential, given the importance of forest products to the Finnish economy. He made his influence known in government circles while UPM-Kymmene became the largest in Europe. 

He served as chairman of the Confederation of Finnish industries. He advised his father’s Union Bank. Between 1992 and 1999 he was chairman of Nokia as became a global leader in mobile phones. Later he became chairman of explosives company Forcit.

His sons also made their mark, to an extent which is rare in family circles. Casimir’s son Henrik became managing director of Pöyry, the engineering consultant in 1986. He generated growth and Pöyry has merged with Sweden’s ÅF to become AFRY, one of the Nordic region’s largest consultants, where he retains equity alongside his brothers Georg and Carl-Gustav. Prior to the AFRY deal, the brothers spun off Finvest. 

As a result the brothers control EQ Securities, Finland’s fastest-growing investment bank, with interests in asset management, brokerage and green businesses, where Georg and Carl-Gustav are proactive.

The brothers’ investment offices are Structor, Corbis and Fennogens. 

Elsewhere, Henrik chairs Otava Group (Henrik is related to the Reenpää family who own Otava), the leading Finnish publisher as well as the Climate Leadership Council. He has forged a link with Sweden’s Wallenberg family by joining the board of the Marcus Wallenberg Foundation.

Carl-Gustaf is the foundation trustee to Kiasma Museum of Contemporary Art. He has been a member of the Guggenheim Foundation’s board since 2008. The foundation has been planning a museum in Helsinki for some while. 

Over the years, Henrik has also served as chairman of YIT Corporation, Finland’s largest construction company, where the family retains a minority stake. 

He is no longer on the YIT board, although Alexander Ehrnrooth has stepped up to become a director.

Alexander is the son of Casimir’s brother Göran. His branch of the family uses Virala, Turret and Holdix as investment offices. He spoke in support of Virala’s decision to increase its share stake in ZetaDisplay to over 10%. Zeta sets out to use behaviour analysis to capture sales for its retail clients.  

Alexander is on the board of Ahlstrom-Munksjö, a manufacturer of fibre products, where Virala has a large stake. Through Turret the family backs Digitalist, a tech-driven consulting firm. 

His branch is best known for backing Fiskars Group, the oldest company in Finland, which owns a range of household brands such as Royal Doulton, Wedgwood and Gerber. Its orange-handled scissors pop up in kitchens across Europe and its cash flow is resilient.  

Paul Ehrnrooth, the son of Casimir’s brother Robert, has been Fiskars chairman since 2000. He is chairman of Turret. Albert, chairman of Virala, is termed an independent director at Fiskars and runs an investment company called Vessila. Louise Fromond, another family members, sits on the Fiskars board and chairs Holdix. 

Paul Ehrnrooth served on the board of shipping engineer Wärtsilä between 2010 and 2015.  The family has backed the group for years as have the Wallenbergs. 

Georg Ehrnrooth used to serve as Wärtsilä chief executive until 2002. He agreed to retire as chairman of Sampo in 2009, after serving on its board since 1992.

Just before, Martii Ehrnrooth was involved in the creation of Vaasa Engineering, dedicated to energy technology. 

Kone provides another link in the engineering chain. Georg’s son, another Henrik Ehrnrooth, serves as chief executive at Kone, a lift maker, following a successful career as an investment banker at Goldman Sachs. 

Henrik was upbeat after being dropped from the Thyssenkrupp bidding process, telling Reuters the risks involved in the offer had become larger than the opportunity. 

And few are better at working out the fine balance between risk and reward than members of the Ehrnrooth family.

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