Juuri Fund entered the markets with a new kind of funding model. As an active minority owner, it promotes the growth of its portfolio company in many ways.
Launched in March 2015, Juuri Fund I reached its target size in the second week of October, when the total amount of investment commitments rose to EUR 81.5 million. The fund seeks to invest in Finnish growth-focused SMEs. The fund is managed by Juuri Partners.
“Our funding combines controlled minority ownership and optimized debt financing from the portfolio company’s perspective. The partners in the fund’s management company take an active role in growing the ownership value of the portfolio companies,” says Anita Ojala, a founding partner at Juuri Partners.
Juuri Partners’ Managing Director Samuli Sipilä has assembled a team of individuals whose networks and know-how are complementary.
“Each of the management company’s founding partners has 20+ years of experience in financing, business development and growing shareholder value. I was invited to join the team because of my expertise in debt financing in particular. Samuli specializes in private equity investing and business development, growth and divestment,” Ojala says.
The other founding partners, aside from Sipilä and Ojala, are Tapani Varjas and Markus Einiö. Both have solid, hands-on entrepreneurial experience.
“Markus has been an entrepreneur, consultant and professional director. His expertise is particularly in areas related to sales, marketing and brand-building,” Ojala notes.
“Tapani’s expertise is in entrepreneurship, investment banking, mergers and acquisitions, minority ownerships, governance, and risk management.”
Ojala says she became very excited about the Juuri Fund idea after meeting the team members for the first time.
“It’s great to be able to support the growth of Finnish SMEs and the national economy with a new kind of funding model.”
Because the Juuri Fund solution involves debt financing along with additional capital, a portfolio company can take even a big growth step without radically changing the ownership structure.
“We become an active minority owner in the portfolio companies. So the majority of the benefits and value we offer during the investment period goes to the majority owners. We support companies in, among other things, eliminating obstacles to growth, in financing growth investments, in broader changes in ownership structure, and in removing growth-focus-based working capital challenges and limitations.”
Ojala is responsible for the financial analyses of the portfolio companies, investment structure planning, realization of financing arrangements, financial monitoring of portfolio companies, and preparations for refinancing and exits.
“It’s essential when an exit takes place that the company is eligible for refinancing. The portfolio company must have a cash flow in order to acquire debt and to pay down debt.”
Ojala gravitated to the financing sector already as a business school student and now has more than 20 years of experience in financing mergers and acquisitions both through debt instruments and own equity. She has worked primarily with major companies, but has quickly adapted to the SME sector.
Juuri Fund is seeking investment targets in multiple sectors. The first investment target it has chosen is KAS-Scaffolding Oy, a family-owned company established in 1983. The company is pursuing strong growth with a customer-oriented service concept in scaffolding and weather protection.
“The Finnish economy is in transition – the relative share of capital-intensive heavy industry is shrinking while the relative share of service sector companies is growing. And there are a lot of interesting service companies operating around the industrial core, companies with growth potential. KAS-Scaffolding, a heavy user of digitalization, is one of them,” Ojala says.
FII managed FoF Growth II fund made a €7.5 million investment commitment to Juuri Fund in June.
"Juuri Fund brings a nice addition to the Finnish SME financing field. The debt financing offered by the fund as well as active minority ownership are instruments that the market needs and which have sufficient, high-quality deal flow," says FII Investment Director Riitta Jääskeläinen.
FoF Growth II is a €130 million fund-of-funds with an investment focus on venture capital funds and buyout funds investing in SMEs . The total amount of capital funded by FoF Growth II to Finnish funds is expected to reach one billion euros in the upcoming years.
FoF Growth II's investment |
|Sentica Buyout IV Ky||10,0|
|VersoFund II Ky||15,0|
|Juuri Rahasto I Ky||7,5|