For Finnish Industry Investment, 2015 was a very good year in terms of results and operations. Portfolio companies were successful and FII’s portfolio value increased.
FII recorded an excellent financial result last year, and this year too is off to a strong start. Despite the prolonged recession, Finnish private equity and venture capital markets have done very well in recent years.
According to President and CEO Martin Backman, FII’s portfolio companies have grown and have seen success in a difficult market environment. While Finland’s economy and international markets continue to face challenges, the portfolio companies have really worked hard to achieve profitable growth.
“FII’s investment teams have also been successful in their work. Thanks to good planning and transaction work, there have been successful new investments, financing rounds, and exits, and the value of the portfolio has grown through active management,” Backman praises the teams’ performance.
“FII has been a more active shareholder. In addition to capital, it’s offering portfolio companies more access to its own and its partners’ expertise,” Backman notes.
There has been good growth in the net sales and value of many portfolio companies, particularly in the venture capital investments, but also in growth and industrial investments.
FII’s cash flow from exits last year was EUR 156 million.
“The number of exits was higher than average. The cash flow from these exits was significantly high and reflects the growth in the companies’ value development. There will be fewer exits this year. We will focus more on creation of the portfolio companies’ growth and value development,” Backman says.
The success of the portfolio companies and the successful exits last year boost FII’s opportunities to invest in new companies directly and through funds, and that helps to accelerate the growth of Finnish companies.
Last year FII’s portfolio funds exited from several companies. The combined cash flow from these exits to FII was a total of EUR 99 million, EUR 7 million of which was through FoF Growth II. For example, the healthcare service provider Pihlajalinna was listed on NASDAQ OMX Helsinki, and at that time the fund managed by Sentica reduced its stake. Sentica’s other exits included the divestment of the Puuilo department store chain to Adelis. Northzone divested the technology company Avito to the South African media group Naspers.
There were also significant exits on the direct investments side, including Mitron (venture capital investments), Holiday Club, Suominen and Glaston (growth investments), and Meyer Turku (industrial investments).
Wide spectrum of new investments
Last year FII made new investments totalling EUR 93 million. In the fund investment side, investment commitments totalling EUR 67 million were made. FoF Growth II made investment commitments worth EUR 38 million during the year.
The new investments were well spread among the different investment teams. The fund investment portfolio saw the addition of the new Finnish Juuri Rahasto through FoF Growth II, and Lifeline Ventures Fund III, both directly and through FoF Growth II.
FII also made several direct follow-on investments with its partners. New companies in the direct investments portfolio included, among others, LeadDesk, a cloud-based solutions developer (venture capital investments); Unisport-Saltex, a manufacturer of artificial turf and other surfaces for sporting arenas (growth investments); the boxboard company Kotkamills, and the shipbuilding company Rauma Marine Constructions (industrial investments).
Added leverage for internationalisation
As in years past, in 2015 FII also invested in several foreign funds. This enables FII to indirectly boost the interest of international funds in Finnish markets and, at the same time, develop and internationalise Finland’s private equity and venture capital markets.
“Foreign funds also make their business expertise accessible to Finnish companies. This is beneficial especially as portfolio companies grow in international markets,” Backman notes.
The beginning of 2016 has got off to a brisk start. FII became a shareholder in the cleantech company BMH Technology to accelerate that company’s international growth. Additionally, FII has invested in the rapidly growing Vaadin and M-Files technology companies, and it has signed a deal with international and domestic investors on the early childhood education company Touhula Varhaiskasvatus.