CapMan, a Nordic private equity firm, has made a significant push into Russia through the part purchase of the management company of Norum Private Equity Advisors and all of its latest fund, Norum Russia Fund III.
CapMan, which has traditionally invested in middle-market buyouts in the Nordic countries (in addition to early-stage investments in technology and life science, as well as real estate), has acquired 51% of Norum Private Equity Advisors and 100% of the advisory company’s share capital and voting rights for about €3.4m.
The price could change dependent on the eventual closing of Norum Russia III Fund, the advisory firm’s third generation fund, which currently stands at €88m, of which CapMan has itself committed €13.5m. The vehicle will be renamed CapMan Russia Fund and has a target of €150m.
Norum Private Equity Advisors has been present in the Russian market since 1995, with offices in Moscow and St Petersburg. Its 13 private equity professionals, headed by managing director Hans Christian Dall Nygård, will transfer to CapMan’s employment, with Nygård taking on the role of head of CapMan Russia Investment Operations.
He will report to senior partner Petri Saavalainen, a senior partner at CapMan since 1995, who will manage integration and development of the Russian business within the CapMan group as head of CapMan Russia.
Saavalainen had also previously managed Alliance Scan East Fund, focused on investments in Russia and Central and Eastern Europe. The fund was managed by Eastman Advisors, a CapMan affiliate.
The fund will focus on small and mid-sized companies in Russia, with a focus on consumer goods and services, manufacturing, telecoms, transportation, financial services and media businesses. Target companies will typically have an enterprise value of €5m to €50m and net sales of €5m to €100m. The fund will typically invest between €5m and €15m per transaction.
“The transaction with CapMan will provide the existing Norum team with the necessary resources to fully take advantage of the opportunities in the booming private equity market in Russia,” said Nygård.
For CapMan, the transaction is an extension of the investments it has made to date in the region in its Eastman Advisors capacity.
“The announced transaction is a significant step in CapMan’s strategy of utilising growth opportunities within the alternative asset class,” said Heikki Westerlund, chief executive officer of CapMan.
“Russia is one of the fastest growing economies, with a strongly emerging private equity market. The Norum team is an excellent acquisition target for CapMan, as it has been in the market for a long time, has a proven track record and has a good culture fit with CapMan’s operating model.”
CapMan will have the right to buy the remaining 49% of Norum Private Equity Advisors for the remaining life period of the CapMan Russia Fund, which will be July 2012 at the latest. To date, Norum has invested in 24 companies, of which 18 have already been exited.
“Since 1995, we have been able to develop several companies into becoming market leaders in their niches in Russia,” said Nygård. “As the Russian private equity industry is still under-developed, there are vast opportunities to pursue in different industries. Our team will put strong efforts into sourcing deals from the Russian regions, as the growth rate of selected Russian regions is outperforming even the strong national GDP growth rate of approximately 8%.”