The Development of Debt Policies : A Case Study of Investor’s and Industrivärden’s Portfolio Companies

Abstract: Debt financing can be seen as both an opportunity to increase profits as well as a financial risk and is thus an important issue for company owners to consider. This study examines the portfolio companies of the investment firms Investor and Indsutrivärden, and how their debt policies have developed from 2004 to 2022. In addition, factors that have been taken into consideration in their debt decisions are studied as well. The thesis uses a mixed methods approach by creating time series of debt levels and by conducting a content analysis of the companies’ reports and presentations. The findings show that Investor’s and Industrivärden’s portfolio companies take similar approaches to their debt policies. However, changes in the debt policies of Industrivärden’s portfolio companies indicate an impact of leadership changes within Industrivärden. Generally, the companies try to minimise the risks of their debt, considering factors such as liquidity and refinancing, financial flexibility, and credit ratings. Macroeconomic risks are also considered, which is exemplified in the management of debt maturities. Over time, an increased focus on green financing and the use of the debt-to-EBITDA ratio is identified. Consequently, the thesis contributes to the literature on corporate debt and ownership.