CapMan Capital Management in November closed its second mezzanine vehicle, Finnmezzanine Fund II, on FMk 520 million (ecu 87 million). The total included a FMk 100 million commitment from the European Investment Bank (EIB), its first direct venture investment in Finland.
CapMan’s first Finnmezzanine Fund, created in 1996, raised some FMk 190 million and is now fully deployed across 12 investments. Six of the 11 participants in the first mezzanine fund are return investors in Finnmezzanine II. Only two of Finmezzanine II’s 13 participants – the EIB and LEL, Finland’s short-term employees’ pension fund – are first-time investors with CapMan. The other partners in the fund, all domestic groups, are the Verdandi life insurance company and its pension fund; the Tapio pension fund; the Finnish gasoline distributors’ pension fund; Fennia; the Aurum life fund; the Ilmarinen insurance company’s pension fund; Pohjola and its pension fund; the mutual life insurer Suomi; and the Finnish local government pension fund.
The new fund is CapMan’s eighth vehicle and brings the group’s capital under management to approximately FMk 2.1 billion.
Tuomo Raasio of CapMan said Finnmezzanine II would target larger deals than its predecessor. The fund will focus primarily on investments in Finnish companies but is not precluded from investing in Finland-related companies based elsewhere. CapMan anticipates growing demand for mezzanine from Finnish companies in the wake of the new Finland’s new Companies Act. This has opened the way for private companies to use a variety of financing instruments such as capital loans, redeemable shares, preference shares and warrants that, although they were sometimes employed, were previously not recognised under Finnish law.
The revised Companies Act was designed to enhance the competitiveness of Finnish companies by giving them access to the same financing instruments used by companies in other European markets.
The EIB’s principal goal is to finance investments that increase employment opportunities. Its investment in Finnmezzanine II, which targets small and medium-sized companies that are major engines of growth and job creation, fits closely with the bank’s objectives, EIB vice president Claes de Neergaard said.
Although the commitment to Finnmezzanine II represents the EIB’s first direct investment in Finland, the European Investment Fund has previously supported venture funds targeting the Finnish market.