Investments in funds, Investments in companies, Impact - 9.9.2014
Finland’s private equity and venture capital industry had a brisk start to the year despite the surrounding macroeconomic challenges. According to the Finnish Venture Capital Association, overall the industry saw some 20 initial investments in later-stage companies, while altogether 22 international investments were made in Finnish early-stage enterprises. International investors were involved in roughly one-half of the larger investment rounds (i.e. over MEUR 1).
The investment focus for Finnish Industry Investment is on building growth. One of the main events during the review period was the launching of the FoF Growth II fund-of-funds together with four Finnish pension funds. Managed by Finnish Industry Investment Ltd, the MEUR 130 fund will invest in approximately 10 funds that operate in Finland. The total capital under management of these funds is expected to reach EUR 1 billion, which will be invested in some 100 portfolio companies with growth potential.
Including the investments made by FoF Growth II, Finnish Industry Investment committed a total of approx. MEUR 25 into four different funds. Direct investments, amounting to MEUR 6 in altogether 13 different companies, focused particularly on younger technology-driven enterprises in the cleantech and service sectors. Of these, six financing rounds included international co-investors which contributed total capital of MEUR 9. In total, capital amounting to six times (MEUR 34) Finnish Industry Investment’s share was channelled into the 13 investee companies.
Finnish Industry Investment deepened the economic impact analysis of its portfolio of investments in funds and directly in companies. Last year portfolio companies’ net sales grew by some 3%, clearly outpacing growth in GDP. The number of jobs in portfolio companies in Finland also rose by approx. 3%, whereas the number of people in employment declined in the same period by approx. 1%.
Finnish Industry Investment shares risk with private investors. Finnprotein Ltd’s investment risk was realised during the review period when the company was declared bankrupt. This had a negative impact on Finnish Industry Investment’s result. After the financial crisis, Finnish Industry Investment’s cumulative payments for investments have exceeded the returns from them by MEUR 260. The company’s financial position nevertheless continues to be stable.
During the review period the Government approved an increase of EUR 100 million in the company’s share capital, for use in an investment programme promoting industrial renewal. Parliament approved the first appropriation of EUR 50 million, to be used for capitalisation during 2014, in its supplementary budget this summer.
“Successful private equity and venture capital investments are not only financially profitable, they also have a positive social impact by creating jobs and boosting economic growth. These are also our goals with the investment programme for industrial renewal. By Finnish standards this is an extensive initiative, and launching the programme will be Finnish Industry Investment’s key objective during the second half of the year,” says Finnish Industry Investment’s Jouni Hakala.
For more information:
Jouni Hakala, Director, Finnish Industry Investment Ltd,
tel. +358 50 400 1767, email: firstname.lastname@example.org
Tomi Riihiranta, Senior Analyst, Finnish Industry Investment Ltd,
tel. +358 50 593 7576, email: email@example.com