November 2, 2017 / 2:44 PM / 2 years ago

UPDATE 1-Nordic holding firm Sampo sees dividends growing, dry M&A outlook

* Finnish company known for dividends, M&A moves

* Sees room for dividend lift after strong year in insurance

* Says no big M&A in sight in the Nordics (Adds comments on M&A and market outlook, background)

By Jussi Rosendahl

HELSINKI, Nov 2 (Reuters) - Nordic financial holding company Sampo will likely lift dividends after strong profits at its insurance business, its CEO said, adding that acquisition opportunities in the region’s financial industry were hard to find.

Sampo’s holdings include the largest Nordic property and casualty insurer If, 21 percent of the region’s biggest bank Nordea and close to half of Danish insurer Topdanmark .

On Thursday, the firm lifted the outlook for If’s underlying profitability and said the unit would pay Sampo an internal dividend of 6 billion Swedish crowns ($716 million), its highest payment so far.

That payout would support the dividends Sampo could offer, Chief Executive Kari Stadigh told Reuters by telephone.

“These internal dividends, of course, support our intention, and the dividend will likely grow moderately next spring,” he said.

Sampo has increased the payout every year since 2008. From 2016, it paid 2.30 euros per share and analysts in a Reuters poll have expected a 2017 dividend of 2.46 euros.

Sampo, 12 percent owned by the state of Finland, has been sitting on cash from years of successful mergers and acquisitions (M&A) activity.

It sold its banking business to Danske Bank just before the financial crisis and then bought Nordea shares at low levels in 2008 and 2009.

Some investors have been expecting another major move, but Stadigh said there were fewer opportunities in the Nordics, which he said was the region that would remain Sampo’s focus.

“There is no big M&A in sight at the moment in the sector, because companies have their hands full of work in their regular business operations. The sector is changing so rapidly,” he said, referring to digitalisation and changes in the regulation.

However, Sampo recently announced more modest plans to invest 265 million euros in Denmark’s Saxo Bank and 230 million euros in payment firm Nets.

“We are looking at further opportunities to invest in the Nordic financial sector. Those opportunities occur rarely,” Stadigh said.

He said that, while Saxo was a promising financial technology company, many firms in that field were too small for Sampo.

Despite the recent rises in the equity market, Stadigh also said it remained the most attractive asset class.

“It is very hard to find added value from the fixed income side... As we are waiting for that last peak, we still see the investment market’s main earning potential in equities.”

$1 = 8.3841 Swedish crowns Reporting by Jussi Rosendahl; Editing by David Evans and Edmund Blair

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