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A century on the Oslo stock exchange

It is 100 years today since Hydro was first listed on the stock exchange. Shares in the company were first traded on the stock exchange in Kristiania, as Oslo was then called, on April 16, 1909. Later that year the share was also listed on the stock exchanges of Brussels, Geneva and Paris.

In fact, the Hydro shares were listed on the Kristiania stock exchange after the Paris bourse made listing conditional on shares also being traded in the company’s country of origin.

Hydro had been founded four years earlier with a share capital of NOK 7.5 million, mostly French and Swedish capital in addition to some Norwegian.

The capital market in Norway lacked funds early in the 20th century, partly because of an economic slump at the turn of the century. Yet Sam Eyde, Hydro’s first President and CEO, wrote in his 1939 autobiography that Hydro gained the trust of the market once he, prior to the listing, "had gathered all the influential men in the country to a public meeting in the capital."

Mostly outside Norway

The massive industrial and power development projects at Notodden and subsequently Rjukan required considerable investment, practically equivalent to Norway’s national budget for a decade. The money had to be raised primarily on the international capital market.

At the beginning of 1907 Hydro’s board of directors decided to enlarge its share capital to NOK 30 million, with a syndicate consisting of Banque Paribas of France and Sweden’s SE bank, which was owned by the Wallenbergs, taking up the share issue. The syndicate worked to obtain further investors in foreign markets, especially France, Switzerland and Belgium.

This explains why the share was listed on the exchanges in Paris, Geneva and Brussels. The conditions were unusual. The shares were issued at par, but the syndicate chose not to sell at less than a premium of 50 percent. But in return it was willing to take a risk, holding on to its shares for two and a half years prior to the listing date.

In 1907 NOK 34 million was also raised for the Rjukan expansion. A considerable portion of the share capital was German, and in 1911, when several of the Rjukan companies were transferred to Hydro, Hydro raised another NOK 42 million in share capital; this time the investors were French, Swedish, German and Norwegian.

First four, then nine

After the 1909 listings it would be 63 years until the next time Hydro was listed on a new stock exchange: London in 1972.

Three years later the share was listed in Frankfurt, Düsseldorf and Hamburg. A year later it was the turn of Zürich and Basel. Three more listings followed in the 1980s: Stockholm in 1983, with Amsterdam and New York following in 1986.

The listing on the industrial index of the New York Stock Exchange on June 25, 1986 was regarded as particularly important. The timing of the listing was not the best, because 1986 was one of few years in Hydro’s long history in which the company lost money. But 1986, when oil and mineral fertilizer prices plummeted, was an extraordinary year – and was, largely due to a successful information campaign in the market, considered to be an exceptional year for Hydro.

American investors did not let the opportunity pass them by, and increased their equity holding in the company from 2 to 15 percent.

The New York listing, coupled with investor confidence in Hydro, also made it possible to raise NOK 2.5 billion in the market in 1988 – despite a generally weaker market.

This was the biggest capital increase to date in Scandinavia and the first time a subscription issue offered by a listed company was available to shareholders in both Europe and the USA.

Profitable share

History has shown Hydro to be a profitable share. This was particularly the case in the 1980s when the price quintupled. The share price trend in the 1990s was more moderate and variable, though its value still doubled. Since 2000 there have been many momentous transactions in Hydro generating a substantial increase in shareholder value until the financial crisis dramatically halted this development in the latter half of 2008.

“During the past year Hydro has delisted from the Paris and New York stock exchanges, and on April 30 it will also be taken off the German stock exchanges. We will from then on be listed in Oslo and London only, while our US depositary shares will be traded on PinkSheets in the USA,” explains Executive Vice President and Chief Financial Officer John O. Ottestad.

Oslo sets tone today

The absolute majority of Hydro’s shares are now traded in Oslo; as capital markets have become more global, the need to be listed on several exchanges has declined.

While there were previously limits on the flow of capital between countries, such restrictions hardly exist these days. Therefore there is no longer a requirement to be listed on several stock exchanges to obtain access to capital. And the globalization of capital markets has led to trading in Hydro shares being concentrated in locations where most trading tends to take place.

Oslo Børs has therefore consolidated its position as the most important listing for Hydro. Investors prefer to trade in the share where there is the greatest liquidity; this secures them the best prices.

“International investors consider Oslo Børs, and the regulatory framework in Norway,  to be fully on par with other stock exchanges and countries," says Ottestad.

“Evidence of this is provided by the large number of international trading houses that are members of Oslo Børs, where they trade directly on the exchange for their international customers. The processes we have been through, in connection with the merger of Hydro’s oil and gas operations with Statoil and the stock exchange launch of Yara in 2004, fully underscore Oslo Børs’ standing as a very professional institution where communication has taken place smoothly and swiftly within some tight deadlines.”

At the end of 2008 Hydro had 42,464 shareholders, of which the Norwegian state represented by the Ministry of Trade and Industry, was biggest with a 43.8 percent stake. Other Norwegian shareholders owned 23.7 percent, with 32.5 percent held by foreign shareholders.

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