Letter To CEO From East Capital Chairman And CIO

As the CIO for East Capital and the CIO for East Capital Group, we are writing to you because we are a shareholder in your company. Since our start in 1997, 25 years ago this very month, we have been working for positive change. We do this by being active and engaged owners, valuing the dialogue and the long-term work we do together with our portfolio companies.

East Capital Group was founded on the idea of convergence, offering investment strategies that captured the opportunity of, at that time, the convergence and subsequent development of Eastern Europe, a transition which we have contributed to through capital and engagement. We later on expanded seeking similar transition opportunities in emerging and frontier markets. A few years ago, we became active even in developed markets in the Nordics and globally again looking for transition opportunities. We are ideally positioned to identify, understand and act upon structural trends affecting markets and companies, with the dimension of change constantly under the radar of our explorer’s mindset. A commonality, across all of our strategies, is our commitment to working for positive change. We are investors, but more importantly we are long-term owners.

In this important anniversary year and reflecting on lessons learned during 25 years, we would like to share with you three key messages:

1. From an investor perspective 2022 is a full pivot from 2021. We observe volatile global markets, still struggling to recover from Covid-19, negatively spurred by inflation and by higher interest rates at the same time as there is an energy crisis in Europe and high geopolitical tensions and conflicts in many regions. We see quality companies with strong structural growth unfairly affected by pessimistic investor sentiment; the question being how long will it last?
2. However, we know from our 25 years of experience that it is during challenging times that most resilient and innovative companies emerge as winners, especially when their corporate governance is robust, which enables them to adequately manage their strategic, environmental and social risks and opportunities. We believe that the work we do together, us as investors and active shareholders, and you as business management, is providing a solid ground to assess, challenge and reinforce this resilience.
3. Beyond the turbulence, there are structural trends which stay very compelling, such as the imperative of investment for climate change adaptation and mitigation, the critical need to measure and protect biodiversity and the emergency of addressing the inherent so called “SDG conflicts”, i.e. how to ensure sustainable development in a balanced way, without any significant harm to any goals and stakeholders. We all need to think in terms of solutions to navigate this roadmap.

We are convinced that volatility, resilience and solutions are a combination which catalyses change, and would like to encourage you to think in terms of transformative change. Do get in touch with us if you have any thoughts or reflections on the above – we are always happy to talk. For more details on East Capital Group, please refer to the information here and to our latest sustainable investment report. We look forward to continuing our dialogue.

Sincerely yours,