The Nordic region's largest investment company, Investor AB (INVE-B.SK), Tuesday demanded prudent dividend policies from its main holdings, which it said should prepare for poorly functioning credit markets due to a prolonged economic downturn.

Chief Executive Borje Ekholm told a news conference trimming dividends is a cheap way for companies to raise capital and strengthen their balance sheets.

The company earlier Tuesday said it was cutting dividends for 2008 to SEK4 from SEK4.75 a year ago as its closely-watched net asset value per share dipped to SEK150 as of Dec. 31 from SEK170 on Sept. 30 and from SEK203 on Dec. 31, 2007.

Investor holds significant stakes in some of Sweden's largest industrial, financial and telecommunications companies, including Atlas Copco AB (ATCO-A.SK), Electrolux AB (ELUX-B.SK), Husqvarna AB (HUSQ-B.SK), L.M. Ericsson Telephone Co. (ERIC), Saab AB (SAAB-B.SK) and Skandinaviska Enskilda Banken AB (SEB-A.SK).

Ekholm said the decline in equity markets and company valuations has opened up interesting opportunities for Investor, which has around SEK22 billion available for new investments after deducting debt payable within five years.

"The current environment is the kind of environment where we should consider operating with a little bit more than the normalized gear level," Ekholm said, adding Investor has a maximum gearing level of 25% and a current net cash position of SEK9.4 billion. Gearing, or leverage, measures the extent to which a company is funded by debt.

He said: "The trick is to figure out when the timing is right to be more aggressive in buying, and I think the next year or two will open very interesting investment opportunities. I would be very surprised if, when we look at this in a few years time, we are still operating with a net cash."

Company Web site: http://www.investorab.com

-By Anna Molin; Dow Jones Newswires; +46 8 545 130 91; anna.molin@dowjones.com

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