Iceland is in the business

THEY used to come in Viking longships. Now the Nordic invasion has taken to the skies. After a day of frenzied speculation on Friday, Icelandair, led by swashbuckling chairman Hannes Smarason, confirmed the rumour that it had bought an 8.4% stake in easyJet. Smarason, one of a clutch of youthful Icelandic entrepreneurs who made fortunes during the Nineties, said the stake, worth almost £50m, was a long-term investment and that he might buy more.

It is part of an avalanche of Icelandic cash that is being used to buy stakes in companies or even whole businesses in Britain.

Fishing is still the biggest export earner and, until recently, the most famous Icelander was the eccentric singer, Bjork, below. But Jon Asgeir Johannesson, 36, the charismatic chief executive of Baugur, has been grabbing headlines. His family-owned group has snapped up top toy store Hamleys and fashion group Oasis.

He also plans to buy Big Food Group, the owner coincidentally of the Iceland supermarket chain, in which it already holds a 20% stake. Baugur sold its 22% stake in Icelandair recently.

Johannesson has emerged with Smarason, Icelandair's biggest shareholder with 30%, as one of the deal-makers driving Iceland's business revolution. But it is also Iceland's tiny size that makes it all the more remarkable that its companies are making such an impact in Britain. In a country with a population of just 294,000 - about the size of Nottingham - cross-shareholdings between leading companies and the core business elite are common.

As well as Baugur's long-running series of investments and Icelandair's latest move, the Icelandic interest in the UK extends to banking, stockbroking and supermarket food.

Icelandic bank Kaupthing Bunadarbanki, the country's biggest company worth £2.1bn, has built up a 19.5% stake in City bank Singer & Friedlander over the past year. After raising a war chest of £410m on the Icelandic stock market this month, it is widely tipped to make a full takeover bid for Singer. And another Icelandic bank, Landsbanki, recently made an approach to buy UK stockbroker Numis Securities. Its approach was rebuffed, but its UK ambition are almost certainly undimmed.

Meanwhile, £350m Icelandic food group Bakkavor has not only made major investments in the UK, it has virtually migrated lock, stock and barrel. It sells chilled ready meals and snacks to most of the UK's leading supermarkets, including Tesco and Marks & Spencer.

It, too, is seen as a potential predator among UK firms. Since May, it has built a 20% stake in British fresh food company Geest. Bakkavor chairman Agust Gudmundsson refused to comment on what Bakkavor's long-term plans were for Geest. 'When we first bought a stake, we said we would not try to take them over in the first six months,' he said. 'I don't want to say any more than that.' The period runs out next month.

While Icelandair has emerged as the stake builder in easyJet, other Icelandic airline businesses also have their eyes on the UK. Aircraft leasing group Air Atlanta Icelandic bought the £100m UK charter airline Excel this month, and last week, Air Atlanta's parent company, The Avion Group, held a reception in London to introduce itself to the UK industry.

Avion, worth more than £500m, is majority-owned by another entrepreneur, Magnus Thorsteinsson. He is one of a trio of Icelanders who made a fortune building a brewing business in Russia before selling it to Heineken for more than £200m.

They took their money back to Iceland and in 2002 their investment vehicle, Samson, took a 45% in Landsbanki, the state bank that was being privatised.

The deal-makers have been helped in their expansion by a benign economic climate. Gudmundsson said a key factor was Iceland's pension set-up. Private and state pensions are all fully funded, in contrast to the deficits typical in the UK, and provide ready investment capital.

He said: 'There will be more money flowing into funds than flowing out for many years to come. Those funds need to put their money somewhere and there are not enough opportunities in Iceland alone.'

Iceland has managed to keep its pensions fully funded due to an almost constantly growing economy, fuelled by deregulation and privatisations.

Apart from 2002, when Iceland was hit by the global recession, the economy has grown by between three and 5% a year since 1995. And in the past year, the FTSE 100 has risen 8% while Iceland's equivalent, the ICEX 15, has leapt by 102%.

The Nordic invasion is unlikely to stop any time soon.