SB Management sets its sights on Nordic start-ups

Ahead of its long-anticipated IPO on October 20, Norwegian robotic and software technology company AutoStore has announced that its share offering is already oversubscribed. That follows the revelation of its indicative price range of $3.16 to $3.63 per share last week as the company is hoping to raise $1.8 billion on the Oslo Stock Exchange, which has only served to whip up anticipation and whet the appetites of prospective investors in advance of the upcoming listing.

Valued at around $12 billion, AutoStore is set to become the biggest Norwegian IPO in decades. Founded in 1996, the company grew steadily by being able to position its technology “as an ideal solution for micro-fulfillment”, perfecting the concept of installing small automated centers in urban areas for quick fulfillments of orders. After reporting record revenues in 2019 with $195 million, a 36% increase compared to 2018, Autostore was further able establish itself in the market thanks to the accelerating trend towards e-commerce and online grocery shopping.

AutoStore’s success attracted the interest of Japanese financial giant SoftBank (SB), whose specialized Vision Fund took a 40% stake in the company earlier this year. The Norwegian’s continually growing performance means that SoftBank has almost doubled its investment at a time when the AutoStore dealis becoming one of the most promising ones among SoftBank’s many recent investments into Nordic start-ups, with senior VP of investments at SB and CEO of its SB Management subdivision Akshay Naheta a key player in many of them. With a track record for unearthing lucrative assets, Naheta’s eye has been caught by the favorable conditions and thriving tech scene in the North of Europe that have seen several of its cities become hotspots for investment in recent years.

AutoStore on the up

Originally hailing from a tiny hamlet of just 400 inhabitants on the west coast of Norway, AutoStore has since grown to serve almost 700 sites in over 35 countries with its fleet of some 20,000 robots. The innovative “cube storage automation” design model pioneered by the company claims to allow site owners to increase their warehouse storage capacity by 300% (or store their existing inventory in 25% of the space), fueling demand for the firm’s services especially since the Covid-19 pandemic. It has cornered around 90% of the cube storage market and remains embroiled in a legal battle with rival Ocado over alleged theft of AutoStore’s game-changing intellectual property.

Given that the founder of SB, Masayoshi Son, regularly claims that robots will surpass humans within 30 years, it’s unsurprising that his company was drawn to AutoStore’s imaginative deployment of AI in the supply chain logistics sector. Savvy to the immense potential of the company, SB’s Vision Fund in April acquired a 40% stake in AutoStore for a reported investment of $2.8 billion. At the time of the deal, the Norwegian start-up was valued at some $7.7 billion. Fast-forward six months and that projected worth has swelled to around $12 billion. It’s expected that the upcoming listing will raise around $315 million via the sale of new shares, as well as bolstering that sum with the redistribution of existing ones.

A Northern Silicon Valley?

Autostore represents the most recent acquisition of tech companies based in Scandinavia and the Baltics. Under Akshay Naheta, SB Management has spearheaded several eye-catching acquisitions of Nordic interests, including significant investments into Kahoot (an ed-tech firm from Norway), and Sinch (a cloud-based communications tool company from Sweden). This ‘Nordic’ phase comes after a massive investment spree in several biotech and healthcare companies, most notable Roche and Pacific Biosciences.

Given SB Management’s emphasis on fast-growing start-ups across a variety of sectors, it’s little surprise that the company’s activity has focused on the Nordic region. Some experts believe it could be emerging as a rival to the – as of now –  undisputed epicenter of tech innovation in Silicon Valley, as the number of Nordic IPOs has risen 110% in 2020 and 260% already in 2021. Those listings have already raised a staggering $12.9 billion this year, compared to just $5.7 billion last year.

These numbers are the result of a very attractive investment environment, even if the fledgling nature of the Nordic market makes it a slightly riskier proposition than sticking with Silicon Valley. However, SoftBank’s success has been built upon bold decisions. After all, founder Son made much of his company’s $300 billion wealth by returning $150 billions of value to shareholders from a meagre $20 million investment in retail and e-Commerce company Alibaba.

As such, the AutoStore IPO could well be the culmination of SoftBank’s recognition of the Nordic countries as home to a multitude of exciting investment opportunities and a highly dynamic market with favorable investment conditions.