H&M's Path to Going Private: Assessing the Persson Family's Share Accumulation Strategy

The Persson family's relentless accumulation of H&M shares has ignited a quiet revolution in the retail sector. Over the past decade, the family—led by Stefan Persson, Sweden's richest individual—has transformed from a minority stakeholder into a near-controlling force, owning 64% of H&M's capital and 85% of its voting rights as of mid-2025. This strategic buildup, executed through their holding company Ramsbury Invest, has positioned the family to potentially take the fast-fashion giant private by 2030. For investors, the implications are profound: a reimagined H&M under private ownership could either unlock long-term value or trap shareholders in a liquidity trap.

Strategic Share Accumulation: A Roadmap to Control

The Persson family's share-buying spree has been methodical and accelerating. Since 2016, they have invested over $6.6 billion to increase their stake from 35.5% to 64%, with purchases surging in recent years:
- 2023: 55.65 million shares acquired.
- 2024: 56.85 million shares.
- 2025 (first half): 42.75 million shares—surpassing the total from the previous two years combined.

This aggressive strategy is underpinned by a self-funding mechanism: reinvested dividends from their growing stake. Deutsche Bank analyst Adam Cochrane notes that this approach allows the family to compound their ownership without external financing, potentially reaching 80% by 2030. At H&M's current market capitalization of $23.3 billion, acquiring the remaining 36% would require $8.4 billion—a sum the family could achieve through strategic partnerships or debt.

The timing of these purchases is also strategic. H&M's share price has declined 9% year-to-date in 2025, partly due to global trade tensions and rising tariffs under U.S. President Donald Trump. This dip has allowed the Perssons to acquire shares at discounted prices, reducing the cost of a potential buyout. Analysts argue that the family's actions align with broader retail industry trends, where privatization is increasingly seen as a way to escape public market pressures and focus on long-term innovation.

Financial Feasibility: Can the Perssons Afford a Buyout?

H&M's financial health provides both opportunities and risks for a potential delisting. As of Q2 2025, the company reported:
- Debt-to-equity ratio: 46.2% (down from 47.7% over five years).
- Cash reserves: SEK 16.26 billion.
- Operating cash flow: SEK 8.5 billion in Q2, with a 165.5% coverage ratio for debt servicing.

While H&M's leverage is manageable, a full buyout would require additional capital. The family would need to raise approximately $15 billion to reach the 90% ownership threshold required under Swedish law for delisting. This could involve partnerships with private equity firms or strategic buyers, though such arrangements introduce risks of overleveraging. H&M's existing debt of $2.2 billion (as of Q1 2025) further complicates the equation, necessitating careful balance sheet management.

Despite these challenges, the Perssons' control over 85% of voting rights gives them significant influence over strategic decisions. This includes pivoting toward high-margin initiatives like digital transformation and circular fashion, which could enhance long-term profitability. However, critics warn that centralized control may reduce transparency and flexibility, particularly in a volatile retail sector.

Market Reactions and Regulatory Hurdles

The market has responded cautiously to the delisting speculation. H&M's stock has fallen 60% from its 2015 peak, with a 21% short interest in its free float—indicating skepticism about its future under family control. Deutsche Bank's Cochrane argues that a private H&M could streamline operations and invest in sustainability, but this outcome hinges on effective governance.

Regulatory challenges add another layer of complexity. Germany's new Zweites Zukunftsfinanzierungsgesetz (ZuFinG II) introduces appraisal proceedings that could delay or inflate the cost of a buyout. Dissenting shareholders may challenge the valuation offered by the Perssons, prolonging the delisting process and increasing financial burdens.

Investment Implications: Risks and Opportunities

For investors, the potential delisting presents a dual-edged sword. Long-term investors who believe in H&M's strategic vision may see value in its focus on sustainability and digital innovation. A private structure could allow the company to avoid quarterly earnings pressures and reinvest profits into high-margin ventures. However, short-term investors face liquidity risks. A delisting would lock minority shareholders into an illiquid asset, potentially forcing them to sell at a discount or hold an undervalued stake.

A hedged approach is advisable. Options strategies, such as protective puts, could mitigate downside risk while allowing participation in potential upside. Diversifying exposure across the retail sector and private equity markets may also balance the uncertainty.

Conclusion: A Calculated Gamble

The Persson family's share accumulation strategy reflects a calculated bet on H&M's future. While their financial capacity and ownership structure suggest a viable path to privatization, the execution will depend on securing external financing, navigating regulatory hurdles, and maintaining operational flexibility. For investors, the key lies in balancing optimism about long-term value creation with caution regarding liquidity and governance risks. As the retail sector continues to evolve, H&M's journey offers a compelling case study in the trade-offs between public accountability and private agility.