Tampere’s investments produced EUR 4.1 million thanks to favourable development in the stock market
The City of Tampere’s investments produced an excellent return in 2019. The investment assets consist of surplus from earlier years and funds on the city’s balance sheet. At the end of the year, the value of the investments was EUR 28.9. Thanks to the good return, that value increased by EUR 4.1 million. The relative return was 18.8%.
- The City of Tampere has invested most of its assets in both active funds and passive index funds. The investments have been geographically distributed across several different markets, although the focus has been on Europe and the United States. The City of Tampere was among those who benefited from last year’s favourable developments in the stock market, says Arto Vuojolainen, Director of Business and Finances.
Approximately two thirds of the city’s investment funds were in equity funds. The remaining third was in sovereign bonds and funds investing in corporate bonds. Last year, the city made no new investments in interest-bearing products.
The City Council approved of the new investment principles last year. They emphasise responsible investing. According to Vuojolainen, the guidelines are already reflected in investment decisions and choices of funds. For example, the city requires that fund managers incorporate ESG principles into the investment process and reporting.
At the end of last year, the City of Tampere was EUR 794.8 million in debt. This was EUR 124.3 million more than a year earlier. Out of the total debt amount, EUR 589.8 million was for loans taken from financial institutions and EUR 205 million was internal debt to the city’s subsidiaries. The shared account of the city and its subsidiaries optimises the use of the group’s operating capital and minimises external interest costs.
The city paid EUR 13 million in interest. Due to the increase in debt, the amount of interest increased by EUR 1.2 million. The average interest rate of the debt was approximately 1.5%. The interest from financial leasing debt outside the balance sheet was also taken into account in the interest calculations. 57% of the loans have been protected against increases in interest rate with interest rate swap agreements. The city paid EUR 43.4 in loan repayments.
The city’s most significant financier was MuniFin Plc which had loaned EUR 249.4 million to the city. In addition to municipal financing and subsidiaries, the city has taken out loans from, for example, the European Investment Bank (EIB), Council of Europe Development Bank (CEB) and Nordic Investment Bank (NIB).
When divided among all the Tampere residents, the amount of the loan per resident is EUR 3,337. One year earlier, the amount of the loan per resident was EUR 2,847.
Text Sami Suojanen