(Updates with more comments from Solidium CEO on investments)
(For other news from Reuters Nordic Investment Summit, clickon http://www.reuters.com/summit/Nordic13)
* Finnish state fund owns stakes in 11 listed companies
* It invested $425 million in Outokumpu share issue
* Fund CEO says investment decisions free from politics
By Jussi Rosendahl
HELSINKI, Sept 30 (Reuters) - Steel company Outokumpu should try to solve its own problems even though itsheavy debts have raised the prospect it might need more moneyfrom shareholders at some stage, the head of Finland's stateinvestment fund Solidium said.
While Finland is often listed among the most innovativeeconomies and remains triple-A rated, government funding isstill badly needed in the country of 5.4 million people whichhas a limited pool of private capital.
Kari Jarvinen, Solidium's managing director, told theReuters Nordic Investment Summit that the fund was making itslong-term investment decisions independent of political pressureto help out troubled Finnish companies.
"It is better that the company tries to sort out itsproblems by itself. The company already had a 1 billion (euros)rights issue only one-and-a-half years ago," Jarvinen said whenasked about Outokumpu's finances. "It is paramount that thesecompanies find ways to be profitable in the future."
Solidium holds stakes worth in total 7.7 billion euros in 11Finnish listed companies including paper maker Stora Enso and investment and insurance group Sampo.
Founded in 2009, its mandate is to invest government moneyin businesses deemed to be of national importance, whileavoiding political interference.
Solidium invested 314 million euros ($425 million) inOutokumpu's share issue last year when the company needed moneyto buy ThyssenKrupp's stainless steel unit Inoxum.Solidium is now Outokumpu's second-biggest shareholder with astake of around 22 percent.
But Outokumpu might need more cash. The company, like othersteelmakers in Europe, has faced weak demand as a result ofcustomers holding back from purchases because of falling steelprices. At the end of the second quarter, Outokumpu'sdebt-to-equity ratio was almost 121 percent, compared with 103percent at the end of March.
RETURNS
Solidium earlier this year backstopped a share issue ofTalvivaara , lifting its ownership in thetroubled miner to 17 percent.
The move helped the company's nickel mine to keep running,but raised questions among the public and the media over whetherthe fund should be keeping alive such a troubled business.
Jarvinen dismissed suggestions the fund was being driven bypolitical objectives.
"We are looking for returns... any other angle into ourportfolio would be wrong," he said. "We took a calculated riskin Talvivaara, let's see how it goes."
However, he said Solidium was not a portfolio investorseeking quarterly returns, but rather a long-term owner.
"Our view is to look at companies in the longer term and ifwe see there is a potential to change the company and itsperformance, we will stay and work together with the company."
Jarvinen noted that many large institutional investors hadtaken money out of Finland since the 1990s, and that pensionfunds' investments would also start diminishing due toincreasing payouts for an ageing population.
Jarvinen also commented on the Helsinki bourse's poor recordin attracting new listings. Once the hot-bed of technologylistings, the exchange has in recent years only seen companiesspun off from others or dual-listings, while its latestfully-fledged main-list initial public offering took place in2007.
"It is a very worrisome development ... We should do all wecan to make sure the Helsinki Stock Exchange remains vibrant andis attractive to new companies to be listed here."
($1 = 0.7385 euros)
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For more summit stories, seeID:nL5N0HM3RK]) (Additional reporting by Terhi Kinnunen; Editing by RitsukoAndo and Pravin Char)
