Finnish private equity firm, CapMan has bough Swedish VC Swedestart Management in a €17 million deal. This transaction extends CapMan’s reach in the Nordic region, where it now has offices in Helsinki, Stockholm and Copenhagen, and brings the company’s capital under management to nearly €1.5 billion.
This is the second step in the firm’s Nordic expansion, after acquiring Danish firm, Nordic Private Equity Group in spring 2001. Ari Tolppanen, CEO of CapMan, said: “Through this joining of forces between CapMan and Swedestart, we are seriously establishing ourselves in the Swedish market, where our aim is to be strong and fully represented in all our business areas, i.e. buyouts, IT & telecom investments and mezzanine investments.” Tolppanen started looking for an acquisition partner in Sweden 18 months ago and knew Lennart Jacobsson, founder and senior partner of Swedestart, through the EVCA, which he previously chaired.
Following the acquisition, CapMan intends to recruit staff to build a buyout team in Sweden. To date, the firm has one buyout investment (A&R Carton) and one technology investment (Utfors) in Sweden. Although Tolppanen says the nature of expansion in the Nordic regions means CapMan has many indirect investments in the country. The company will also build a life science team, a new sector for CapMan but one of Swedestart’s areas of expertise. The existing CapMan and Swedestart funds will be invested separately, although with mutual co-investment rights, until fully committed when a joint fund will be raised.
Established in 1995, Swedestart manages four funds totaling €160 million. Like CapMan’s technology portfolio, the company’s technology investments focus on IT and telecommunications. “A significant presence in Nordic key markets enhances our possibilities to help our existing and new portfolio companies to grow and become international, and thus further increases the attractiveness of CapMan and Swedestart in the eyes of the entrepreneur,” says Jacobsson.
The deal has been financed by cash payment and the issue of 4.5 million new CapMan shares to Lennart Jacobsson, Jan Lundahl and Lars Hagdahl, the three owners of Swedestart. They will become senior partners of CapMan with 5.9 per cent stake in the company. CapMan will receive between four per cent and 20 per cent of carried interest generated by the fully-invested Swedestart II fund, 12 per cent of carried interest from Swedestart’s Tech Fund and ten per cent of carried interest from the Swedestart Life Science fund. The net annual IRR for Swedestart’s first fund was over 40 per cent and over 180 per cent for the second fund.
CapMan specialises in mid-sized buyouts and technology investments in IT, telecommunications and media sectors and recently closed its seventh fund, CapMan Equity VII at €166 million. CapMan also manages three mezzanine funds under the Finnmezzanine name and invests in other European private equity funds via its fund-of-funds affiliate, Access Capital Partners.