Announcement of a Change in Shareholding According to Chapter 9, Section 10 of the Finnish Securities Market Act

Paradigm Capital Value Fund SICAV notified that its direct holding in Sitowise Group Plc increased above the 25.00% threshold to 9,100,686 shares, representing 25.39% of the company's 35,845,665 shares and votes as of 14 January 2026, per Chapter 9, Section 10 of the Finnish Securities Market Act. The filing notes no related financial instruments and that the fund is not controlled by any natural person or entity; its previous disclosed stake was 20.40% (27 Feb 2025). Crossing the 25% ownership threshold may have governance implications and signals notable accumulation by a single institutional investor.

Analysis

Market structure: Paradigm’s move to 25.39% of Sitowise (NasdaqHEL:SITOWS) materially reduces free float (~9.1m of 35.85m shares) and increases control concentration, improving the odds of strategic moves (board influence, asset sale, or negotiated deal). Winners are Paradigm (ability to extract value) and any buyers who can access block liquidity; small retail holders face reduced liquidity and potential temporary volatility. Competitors (e.g., SWECO SWECb.ST, AFRY AFRY.ST) see limited immediate market-share impact but a higher M&A comparables valuation floor for the sector if Sitowise is repositioned or sold.

Risk assessment: Key tail risks include a hostile squeeze (rapid sell-down by Paradigm to realize gains), a forced mandatory bid if Paradigm pushes >30% within 6 months, or regulatory/backlash in Finland over control concentration. Near-term (days–weeks) expect higher intraday volatility and lower liquidity; medium-term (3–12 months) potential re-rating if activism leads to cost cuts or divestment; long-term depends on execution of any strategic review. Hidden dependencies: vendor/customer contracts and municipal infrastructure exposure could be disrupted by management turnover, affecting revenue visibility by ±5–15% annually.

Trade implications: Direct play is a tactical long in SITOWS sized 1–3% portfolio weight on a pullback ≤5% from current price, targeting 20–35% upside over 6–12 months if activism catalyzes a sale; use a 10–12% stop. If options are available, buy 6-month ATM call or implement a collar (buy 6m 10% OTM put, sell 6m 25% OTM call) to cap downside while funding upside. Sector rotation: modest overweight to Nordic engineering/consulting (SWECb.ST, AFRY.ST) given higher takeover arbitrage potential; underweight commoditized construction suppliers.

Contrarian angles: The market underestimates that Paradigm is value-oriented and may prefer a negotiated sale rather than a full takeover, which would favor a controlled, step-up premium path rather than a binary event. The reaction could be underdone if investors assume immediate 30%+ mandatory bid risk; probability of Paradigm reaching ≥30% within 6 months is material (~30–50%) but not certain — price should reflect optionality, not certainty. Unintended consequence: aggressive cost cuts or asset sales could trigger client churn and earnings downgrades of 10–20% in the following 12 months, creating an opportunity to re-enter at better prices.

Key Decisions for Investors

• Establish a 1.5–3.0% net long position in Sitowise (NasdaqHEL:SITOWS) on any pullback up to 5% from current levels; target 20–35% total return over 6–12 months and set a hard stop-loss at 10–12% to limit downside from liquidity squeezes.
• If liquid, implement a 6-month collar on the SITOWS position: buy 6m 10% OTM puts and sell 6m 25% OTM calls to finance protection; if options illiquid, buy the equity and buy a 6m ATM put instead (cost cap ≈3–5%).
• Construct a 1:1 beta-adjusted pair trade: long SITOWS (1–2% portfolio) vs short SWECO (NasdaqSTO:SWECb.ST) or AFRY (NasdaqSTO:AFRY.ST) sized to neutralize sector beta over a 6–12 month horizon, to capture re-rating upside while hedging macro/sector risk.
• Prepare to materially increase exposure (up to +5% incremental) if Paradigm notifies >=30% ownership within 180 days — that raises takeover probability and typically compresses deal timing; conversely, trim 50% of position if Paradigm announces a rapid sell-down >5% within 30 days.