Industry Investment in 2009: Follow-on investments and stabilisation financing

Investments in funds, Investments in companies, Impact - 29.3.2010

Government-owned investment company Finnish Industry Investment Ltd made new investments in 2009 totalling MEUR 61.3. The company’s total investments rose to MEUR 619. At the end of 2009, Industry Investment was an investor, either directly or through funds, in altogether 439 companies.

The review year was one of follow-on investments to strengthen portfolio companies and stabilisation investments in companies encountering temporary difficulties due to the recession. Portfolio companies used the money provided by Industry Investment and its private co-investors to strengthen their sales and marketing, build new production plants, pursue mining projects, and form larger corporate entities that are more competitive in the global marketplace.

Industry Investment’s role as a spreader of risk is often a decisive factor in implementing financing arrangements when high-risk investment projects or large amounts of capital are involved. We invest alongside private co-investors and on the same conditions. We limit our investment to one-half of the capital invested and of the ownership,” says President & CEO Juha Marjosola

“A growing proportion of our fund investments is made in foreign funds, while foreign co-investors are increasingly involved in direct investments. Through these channels, Industry Investment promotes the internationalisation of Finnish companies and Finland’s investment sector.”

A second consecutive year of declining investment valuations resulted in a consolidated loss of MEUR 11.6.

 

Direct investments and financing programme for stabilisation

In 2009 Industry Investment made direct investments totalling MEUR 21.4, comprising 6 initial investments and 8 follow-on investments. The prominent sectors for direct investments were energy & environment, services and the engineering industry.

As a new initiative, Industry Investment launched a MEUR 100 Financing Programme for Stabilisation. The aim is threefold: to safeguard the operations of viable companies that have encountered temporary difficulties as a result of the recession, to promote the corporate and sectoral restructuring needed in Finland, and to protect Finnish jobs.

In 2009, Industry Investment made initial investments in Componenta Corporation, a supplier of cast components, Confidex, a manufacturer of contactless ticketing and RFID solutions, Machinery Group, a multisectoral corporation, Rustholli, a home renovation company, Top-Sport, a sports and leisure equipment chain, and Ursviken, an engineering company.

Industry Investment made follow-on investments in mining company Endomines, maritime software provider Eniram, engineering group Halikko Group, pharmaceuticals company Ipsat Therapies, nonwoven fabric manufacturer Lacell, brain scanning developer Nexstim, special chemicals and coatings manufacturer Silecs, and mast-climbing platforms and hoists manufacturer Scanclimber.

During the review year, Industry Investment exited from healthcare provider Terveystalo Healthcare and EMS manufacturer Jutron, and reduced its holding in pharmaceuticals developer Biotie Therapies.

 

Fund investments bring experience and international networks

Industry Investment made 4 new commitments to funds, amounting to MEUR 39.9. These funds – DFJ Esprit Capital, K III Denmark, Verdane Capital and Capman Buyout –invest primarily in growth-stage technology companies, the restructuring of SMEs, and secondary markets.

The emphasis in new fund commitments was on foreign funds, through which Finnish companies receive international venture capital and expertise. A high priority, particularly for early-stage investments in foreign funds, is the fund’s interest in exploring Finnish companies as part of its deal flow, and in exploiting its international competence and contact network to promote the internationalisation of portfolio companies. 

In addition, Industry Investment’s subsidiary Start Fund I Ky made follow-on investments amounting to MEUR 2.5 in 14 growth companies in its portfolio. Start Fund’s follow-on investments focused on energy & environment, consumer services, and business & industrial products. Companies needed capital in particular for sales and marketing, building a network of subcontractors and distribution channels, expanding their production or supply of services, and for international expansion.

The MEUR 135 FoF Growth co-founded by Finnish Industry Investment Ltd and Finnish employment pension companies, and managed by Industry Investment, started operating and invested a total MEUR 35 in the Folmer Equity, Nexit Infocom and Sentica Buyout funds. These funds invest in the development and restructuring of Finnish SMEs and in growth-stage wireless communications companies in Finland, the other Nordic countries and the USA.

 

Finnish Industry Investment Ltd is a government-owned investment company that promotes Finnish businesses, employment and economic growth through capital investment. The company invests in growth companies, directly and through funds, together with private co-investors. Capital investments are needed for financing the growth of portfolio companies, internationalisation, spin-offs, major industrial investments, and sectoral and corporate restructurings. The targets are in all sectors. The investments of Finnish Industry Investment amount to over MEUR 640. www.industryinvestment.com

 

More information:

- Juha Marjosola, President & CEO, Finnish Industry Investment Ltd,
tel. +358 9 6803 6811, juha.marjosola (at) industryinvestment.com