CASES: THESE PROVIDE JUST A SNAPSHOT.
Swedbank rescue: 1,110 enterprise, USD10 billion assets, 4 countries, 125 FTEs
Raktas was retained, given its experience and skills, by the Swedish Central Bank (‘Riksbanken’) to design and lead the Bad Bank rescue of Swedbank during the ‘Credit Crunch’ (2008-2012).The bank had a 35% share of market and thus posed a serious threat to the stability of the economies of Estonia, Latvia, and Lithuania, even Sweden.
Relying on proven better practices, with suitable insightful and innovative adaptions, Raktas secured unwavering support from ‘Riksbanken’ as well as financing facilities from the Swedish Finance Ministry for liquidity needs. Also, it requested and received ‘carte blanche’ authority (based on trust & respect) to take the necessary actions to remedy the unfolding crisis. The Raktas team-lead reported to the new CEO (Michael Wolff), yet ultimately answered to Riksbanken. Raktas was appointed to Swedbank’s Central Credit Committee: a highly unusual but creative decision, that led to much more productive outcome for all stakeholders.
Over USD 10 billion of problem exposures were identified and rank-ordered. Enterprises (across the full spectrum of economic activity, such as: real estate, construction, retail, manufacturing, food processing, logistics) were actively managed by the Raktas team to ensure cash flow for survival and debt repayments to manage the enormous book of Non Performing Loans (NPLs). In parallel, Raktas worked to assist in a successful financing round for Swedbank. The project team was built from an original core of 3 to 126 FTEs (at its peak) covering Managerial, Operational, Legal and Financial disciplines. While the majority of the team were Baltic nationals further colleagues were drawn from Sweden, Finland, Denmark, Germany, the UK and US: all stationed in the Baltics.
The rescue was completed successfully: returning capital and interest, ahead of schedule, to the Kingdom of Sweden in 2012. Over 95% of the enterprises were “saved”; protecting jobs and livelihoods; stabilising the economy and reducing social tensions. Raktas’ association ended at this time. Swedbank went on to a prosperous future for the medium term, until new management was appointed in 2016, the board again losing sight of the dyanmics in the 3 vibrant Baltic markets and Swedbank drifted back into troubled waters.
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Pōhjala Brewery: Tallinn Estonia, Top 100 World brewer
Raktas was asked to assist the 4 owners how to transform their hobby craft beer operation, housed in two containers to a modern brewery. The challenging journey form passionate idea, through to start-up to commercially viable SME. Raktas’ experience and skills in the brewing category, consumer goods, finance as wella s strategy and governance were key factors for success. Raktas worked with the owners and board of directors.
A multi-year transformation plan was conceived and largely followed. Based on its innovative offerings, Pōhjola was able to move down the cost-curve with volume expansion coupled competitive pricing and selective investments to increase sales. From an initial domestic sales base, Pōhjala now exports to over 130 countries globally. Financing was derived from innovative use of debt & equity instruments, in particular a Convertible Loan Note – suggested by Raktas. It was a very innovative instrument when first used in Estonia, and now quite commonplace amongst local start-ups and SMEs.
Now, Pōhjala is firmly placed in the World’s top 100 beers - Ratebeer ranking 55 (there are over 10,000 produced globally!) Not bad for a little brewery in Estonia, a country with a population of 1.9m. Today, Pōhjala occupies a new, modern brewery in central Tallinn; its tasting room is a Top 10 tourist attraction for the annual 4.6m foriegn visitors to the city.
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Danfoss (Turbocor): Engineering, magnetic bearing based compressors. SME, 75 FTEs. US
Raktas was approached by the Australian owners of its Canadian based R&D shop in Montreal - Turbocor, essentially a long running start-up. It produced a revolutionary, bespoke high-tech magnetic bearings. By way of example, a magnetic bearing can spin at up to 120,000 RPM compared to a car engine’s 6,000! The owners asked for assistance to secure financing to fund ongoing R&D and related operations.
Raktas quickly convinced the owners that commercialisation of its high technology offered the best route forwards. Yet, this entailed a radical restructuring of the business into a commercial enterprise. Essentially, this transformation would take Turbocor from a start-up to a functioning, commercially-viable manufacturer. The product/market application was chosen - the compressor market, ostensibly oil-free, centriphical compressors for “chillers” in HVAC. Turbocorp realised the challenge under Raktas’ guidance. A competitive product was designed and produced to acceptable cost-quality-deliver standards at appropriate volume and pricing levels. The operations and manufacturing processes as well as assets were secured. Marketing & Sales functions introduced. Requisite staff hired and trained.
Raktas provided the robust strategy and then actively managed the implementation of its elements over a two-year period to transform Turbocorp from lab to shop to a viable business. During this process, the company was re-located to the US - Talahasse FL. Furthermore, it was recommended that a strategic partner along the business system be found to secure the positive development of the business. The product was truly innovative. Raktas led the search for strategic partners, several contenders were identified and a relationship was secured with Danfoss (global sales USD 6 billion).
Once finalised, Raktas’ task was successfully completed: taking an leading edge technology to successful commercialisation. The partners invited a Raktas representative to join the Board of the new JV. After several years, the representative proactively resigned, when he felt Raktas’ work was complete.
The JV revenues grew from USD10 to 53m in the period, with rapid growth in cash flow, margins and profits. The original owners made a 12x return upon ‘exit’. Danfoss Turbocor continues to thrive to this day.
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(CURREnT) VOOL: EV charging start-up, Estonia
This project is ongoing: Vool.
Raktas was approached to act as a Strategic Advsior as well Angel Investor for Vool.
Vool provides a more efficient (3x) charging point for Electric Vehicles as well as an innovative method of payment. This combination of soft/hardware facilitates the expansion of the overall network of charging points by including privately owned spaces. At present, it is estimated that 29 million charging stations are required by 2030, the current park is less than 400K. The Vool charger is designed to be used at available parking spaces ‘owned’ by private individuals (single with parking) as well as property owners with multiple parking facilities (such as multi-story dwellings, retail & super/hyper-market locations, airports, railway stations, etc) as well as fleet owners. The charging points are wall/stand-mounted, connected to existing electrical points. The additional USPs of the Vool system is its simple payment system, that compensates the parking space ‘owners’ for the charge consumed (and initial outlay for the charging point) at their parking spots; as well as reducing the need for further infrastructural build out by government agencies and companies.
The Vool offering provides a Climate-positive effect, as well as a source of further innovation, business growth and employment.
Raktas is actively engaged in mentoring senior members of the team, as well as providing support in Strategy, Business Planning and Financing. Management has just returned from a funding round with VC houses in the US and is midway through an additional funding round, Watch this space!
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RAKTAS RESEARCH QUOTED in specialist journal - “whisteblowing”
It is satisfying when the work of Raktas has a beneficial effect, not only for our clients but a broader audience and Society at large. This effect has occured several times.
The lastest example is Thomas Ehrmann and Aloys Prinz citing Raktas’ work and research into the dynamics and economics of “Whistleblowing - it doesn’t pay”. The original work and its derivations were conducted for a variety of clients operating in: Finance, Bank Resolution, Government-Regulatory and Consumer Goods sectors in Greece, Cyrpus, Austria, Bulgaria, Croation, BH, Sweden, Eire, the UK and US. The Ehrmann/Prinz paper was published in the ’European Journal of Law and Economics’ (November 2023).