The woes in the paper and packaging market have not made it easy for the Jefferson Smurfit Group to achieve its aim of significantly broadening its shareholder base. In 1995 it set a target of having 40 per cent of the group shares in the hands of overseas investors.

This week the group revealed that it is close to reaching that target with some 37.6 per cent of the group now held by overseas investors, up from 22 per cent in 1995.

At that time only 14 per cent of the shares were held by US investors. This has now increased to 24.7 per cent. In 1996 British investors owned 8 per cent of the group. This has increased to 11.13 per cent.

But the difficulty of enticing investors to put their money into the paper and packaging sector while it is in a long running downturn are apparent. Despite a strong drive to interest European investors and the group's significant manufacturing presence in mainland Europe, these investors now hold less than 1.6 per cent of the shares.

A share register breakdown in April shows that the holding of domestic institutions was reduced to 42.65 per cent from 55 per cent in July 1995. And domestic private investors reduced their stake from 10 per cent to 6.46 per cent. Overall the stake in Irish hands - apart from directors and management - fell from 55 per cent to 49.1 per cent.

The drive to widen its shareholder base has coincided with a longer than expected downturn in the fortunes of the sector. The group reported profits of £420 million for 1995. Then demand eased, production remained high and oversupply pushed prices even lower.

Just when it looked like prices were trending up again, the Asian crisis hit, putting pressure on the supply/demand equation in the key US market. Now it looks as if the sector is in for a difficult time with no product price increases likely this year. While Smurfit is seen as a well managed and financially strong group, sentiment towards the sector will make it difficult to interest foreign shareholders for some time.