REYKJAVIK (Dow Jones)--FL Group (FL.IC), the highly acquisitive Icelandic investment company, will dispose of all but around a third of Icelandair Group when the aviation company is sold in a public share offering this spring.

"We're quite prepared to act as the anchor investor," Hannes Smarason, chief executive and one of the two main owners of Reykjavik-based FL Group told Dow Jones Newswires. "That probably means (retaining) 20% to 30% to 35%, but frankly we're keeping that open until we get into the process."

Icelandair, owned 100% by FL Group, has annual revenue of more than ISK3 billion and operates 17 Boeing aircraft with flights to 22 destinations in 10 countries, including six major cities in the U.S.

Smarason said the airline is looking to add new long-haul routes including China, Japan and U.S. destinations such as Seattle, Los Angeles and Denver.

FL Group, which has become well-known for its fast and aggressive investment strategy since 2004, last year bought the merged Sterling-Maersk airline and recently upped its stake in low-budget U.K. airline easyJet PLC (EZJ) to 16.9%.

Smarason said that although some easyJet routes have to comply with U.K. regulation rules on restricted non-U.K. ownership this doesn't scupper aspirations of increasing its easyJet holding.

"There are always ways that you can go to get around that. You could team with U.K. based partners, you could do all sorts of things to allow you to get around that if you wanted to. It's more just the financial merits and the outlook for the operations (which makes the decision)," he said.

Since 2004 the group has gone from airline operator to investment company with airlines now making up only around half of its balance sheet. It has amassed large holdings in Icelandic banks including Kaupthing Bank Hf. (KAUP.IC) and Glitnir Hf. (ISB.IC) as well as other sectors such as Norwegian investment company Aktiv Kapital ASA (AIK.OS), Denmark's Bang & Olufsen A/S (BO-B.KO) and Royal Unibrew A/S (RBREW.KO).

Smarason didn't disclose the amount of cash the group expects to raise from the Icelandair listing, nor what it would be used for, but market watchers said the cash generation is a sign FL Group is set to continue its acquisition spree.

Smarason said FL Group aims to grow its equity as much as eightfold within 10 years with future expansion continuing to focus on Northern Europe, in particular Scandinavia and the U.K.

"The reason is that we feel we know that market reasonably well," he said. "There are other companies that we are familiar with that are doing work in these regions. There are some good deals to be done there and it's good that we're based in Iceland still with relatively easy access to the markets."

FL Group's income from investments in 2005 rose to ISK19.6 billion from ISK2.1 billion in 2004. Total assets have nearly tripled within a year to ISK132.6 billion from ISK43.5 billion.

"What we try to do is have a clear plan for how we will improve the performance of companies we invest in. We don't have to own everything. If we own a significant stake we can have some influence," Smarason said.

Smarason, who is 38 years old, is one of the new generation of Icelandic's business leaders who have been driving business growth and foreign investment since privatization and deregulation broke up state controls in the economy during the early 1990s.

With a bachelors degree and MBA from the Massachusetts Institute of Technology, Smarason came to FL Group in 2004 after stints with McKinsey & Co. in Boston and then Iceland's deCode Genetics company.

When the economy opened up many talented managers who began their careers abroad returned to change the way Iceland does business, he said. "That transformation has happened in the last five to six years and has really taken hold right now. That's why people at the head of companies aren't so old."

The growth spurt stuttered last month on worries in financial markets over Iceland's debt exposure knocked down the Iceland's stock market. The slide has hauled down FL Group's share price 12% in the past month but over a 12-month period it's up some 66%.

Smarason said that the group's strategy of diversifying its business abroad has enabled it to "weather the storm" of recent market turbulence. He dismissed concerns about Iceland's prospects, saying that some reports critical of the Nordic island "don't reflect all the data and ignore changes in Iceland over the past few years.

"Take for example the growth in foreign debt," he said. "People tend to forget that most of that growth is due to investments by Icelandic companies in foreign companies. It looks like a big number on a per capita basis but it doesn't have to do with the population of Iceland, it has to do with operations that are elsewhere.

"We simply don't fit the same statistics as other economies and people tend to forget that."

Company Web site: http://www.flgroup.is

-By Louise Nordstrom and Eliza Reid, Dow Jones Newswires; +46 8 545 130 97; [email protected]

(END) Dow Jones Newswires