Acquisition offers put $286m value on Icelandic geothermal spa Blue Lagoon

Blue Lagoon, Iceland (source: flickr/ Chris Yiu, creative commons)
Alexander Richter 12 Jul 2017

The geothermal spa Blue Lagoon in Iceland has a market valuation of roughly $290 million with offers of up to $96 million for a 30% stake in the company in a sales process by owner HS Orka.

In news in Icelandic media this morning, it is reported that HS Orka has received offers for a 30 percent stake in the Blue Lagoon geothermal spa in Iceland.

Offeres received from foreign enterprises for the stake run up to ISK 10 billion (or around $96 million). The Blue Lagoon is a geothermal spa on the Reykjanes peninsula on the southwestern tip of Iceland about 45 km from the capital Reykjavik. It is one of the largest tourism companies and tourist destinations in Iceland.

As we reported, the share of of HS Orka was placed in a sales process in mid-May 2017. Sources say though that bids from three or four foreign investment funds were received before the deadline for submission of offers expired on 30 June 2017.

The prices offered now put the market value of the Blue Lagoon at over ISK 30 billion (or around $286 million). This – so the news – has been in line with the expectations of the seller and gives rise to continuing negotiations with investors. It is expected that it will take two to four weeks to see if the transaction will proceed. Consulting company Stöplar Advisory oversees the sales process on behalf of HS Orka.

Magma Energy, a subsidiary of the Canadian energy company Alterra, owns a 66.6 percent stake in HS Ork while the joint venture, Jarðvarmi, which owns fourteen pension funds, owns 33.4 percent. According to HS Energy’s shareholder agreement, Jarðvarma’s Board of Directors must approve the possible sale of the Blue Lagoon to be realized. The largest shareholders of Jarðvarma, each with a 20 per cent holding, are the two pension funds, Lífeyrissjóður verslunarmanna and Gildi Lífeyrissjóður. On the board of the Blue Lagoon are Ásgeir Margeirsson, CEO of HS Orka, and Anna Skúladóttir, board member of HS Orka.

Blue Lagoon revenues increased by 43 percent in 2016

The Blue Lagoon’s profit before EBITDA was EUR 28.2 million ($31 million) in 2016, equivalent to ISK 3,400 million at current exchange rates, increasing by almost EUR 7 million ($ 8 million) from the previous year. In just five years, the Blue Lagoon’s EBITDA profit has almost tripled. According to market sources, estimates assume that the EBITDA will continue to increase this year.

The growth of the Blue Lagoon has been enormous in recent years. There was no change last year, but the company’s income totalled EUR 77.2 million (ISK 10.3 billion, or around $81 million), based on the average exchange rate of the euro in 2016, increasing by more than 43 percent between years. In 2012, the Blue Lagoon’s income in comparison amounted to only EUR 25 million. For the first time, the number of visits reached over a million last year, with 1,122,000 visitors to the Blue Lagoon in 2016, about 200,000 more than the previous year. Revenues from bath guests amounted to about EUR 45 million, or about 58 percent of the Blue Lagoon’s total income.

The Blue Lagoon’s equity was EUR 53.6 million at the end of last year, with a capital ratio of over 49 percent. Return on equity amounted to just under 44 per cent last year and the company’s interest-bearing debt amounts to only EUR 34 million.


The share company Hvatning is the largest owner of the Blue Lagoon with a 39 per cent stake. Fund Framtak II, owned by pension funds, financial institutions and other institutional investors, owns 49.45% of the company, while Kólfur holds around 50.55% of shares in Hvatning.

The owners of Kólfur are Grímur Sæmundsen, CEO and Founder of the Blue Lagoon (75 percent) and Eðvard Juliuson (25 percent). Furthermore, the holding company Keila owns 9.2 percentage points in the Blue Lagoon, but it is in majority ownership. Other shareholders in Keilu are Úlfar Steindórsson, CEO of Toyota Iceland, and Deputy Chairman of the Blue Lagoon Board, and various Blue Lagoon Managers.

Helgi Magnússon, Chairman of the Board and former Deputy Chairman of the Pension Fund, including 6.2% stake through Hofgarður and Sigurður Arngrímsson, Investor and former employee of Morgan Stanley in London, owns about five percentage points.

The news is first published in the Market, the Journal of Business and Economic Affairs.

Source: Market, the Journal of Business and Economic Affairs of – in translation