I
wrote about the GDP growth in Iceland and wondered where the growth was coming from. I was right, 2011 was a record year for Corporate Bankruptcies since the collapse of the financial system and we have data only until November. What is more interesting is that for the first time in the last 11 years the number of companies formed (1533) has never been closer to the number of companies that were insolvent (1427).
I think we should also look at wage and employment numbers to see if that is driving the growth. The second graph is the total labor force as can been seen that has dropped since the financial collapse. The third graph is the unemployment %, 2011 is my estimate as we have data only till the 3rd quarter of 2011. I estimate 7.25% unemployment for the whole year, please don't hold me to it because I don't believe in estimates. As can be seen the macro variables don't look all that great for a GDP growth but
IMF, the
Central Bank of Iceland and the
Ministry of Finance all say there is GDP growth so we all just have to take their word for it. I can say one thing the sentiments are improving, I saw the
following news published by one of the
investment companies Eyrir Investment, that they have successfully convinced a Pension fund to invest in them and they have started a new
venture capital focused fund called
Eyrir sprotar slhf. This is very encouraging.
"Eyrir Invest ehf. has today decided to increase the number of shares in the company by approximately 10% by selling 101 million new shares at the price of 24.25 ISK. The total number of shares after the issue is 1,108,681,220 each share is 1 ISK of nominal value. The new shares will be purchased by Lífeyrissjóður verzlunarmanna (The Pension Fund of Commerse).
The issue of new shares increases the investment capacity of Eyrir Invest. Simultaneously with the issue Eyrir has founded an independent investment company for investments in venture capital; Eyrir sprotar slhf. Eyrir sprotar will emphasise supporting promising ventures for international growth and value creation."
Although the skeptic in me says lets see what they do with the raised capital. They have raised almost $25,000,000 that is a decent size for Iceland if all the capital is going to be deployed in venture companies but I fear they will invest in companies that will take a long time to establish themselves like
Ossur or Marel. I really would like to understand their investment thesis. I think what is needed are companies that are growing really fast outside of Iceland.
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