GP Profile: Summa Equity

Established five years ago and headquartered in Stockholm, Summa Equity is a private equity firm focused on thematic investing and backing three core trends: resource efficiency, changing demographics, and technology-enabled businesses.

"Our largest challenges are also our largest investment opportunities," says Reynir Indahl, co-founder and managing partner at Summa. "The world's population now counts 7.8 billion people and that number continues to grow; those people need food, so agri-tech is a good space to be in. Meanwhile, we are running out of resources, so waste and recycling is also attractive, and so is tech, which is providing a lot of solutions, especially tech companies that are making the world more compliant, more transparent, and more productive. We have an older population, and so healthcare is growing strongly. And there are a lot of people on the move, so there are opportunities within education and security."

Summa employs 18 investment professionals and manages roughly SEK 14bn (€1.4bn) in assets. It targets mid-cap companies primarily in the Nordic region and buys controlling stakes in companies by typically providing equity tickets in the range of €30-100m.

The firm raised its debut fund in 2016, closing on its SEK 4.5bn hard-cap. The vehicle has been deployed across 12 companies; 11 based in the Nordic region and one in the UK. Summa is currently fully invested and has so far completed four exits. Its first exit was in April 2019, when it sold its portfolio company Lin Education to Norvestor-backed Xllnc, which later rebranded as Foxway. In March this year, it sold environmental services group Sortera to Nordic Capital for around €393m.

More recently, Summa sold Finnish biotech firm Hytest to trade buyer Mindray for €545m. According to Mergermarket, the company was sold based on a 2021 EBITDA of €22m. Indahl declined to comment on the returns that the GP achieved on the exits, but added that Sortera, followed by Hytest, generated the highest returns.

Summa also partially exited software provider EcoOnline and biotech company Olink by listing them on Euronext Growth and Nasdaq Global Market, respectively. The GP still owns a minority stake in Olink and EcoOnline via its second fund. 

The GP told Unquote that it was seeing strong interest in companies in both its first and second fund, and would not rule out doing more exits this year.

Back for seconds
Summa is currently investing its second fund, which closed in February 2019 on its SEK 6.5bn hard-cap. It has so far invested in five companies, including Holdbart, a surplus food retailer based in Norway; and Myneva, a software provider for the social care sector. It is about to finalise two additional deals, bringing the total number of platform investments from the second fund to seven. A source told Unquote that the second fund was now almost fully deployed; Indahl declined to comment on whether the GP was in the market with a third fund.

All of Summa's portfolio companies did better in the last 12 months than in the year before that, Indahl says: "Our portfolio has proven that the type of companies we have not only provide solutions for global issues, but are also more resilient and future-proof."

"Roughly half of the companies we have invested in are buy-and-builds," says Indahl. "We want companies that provide solutions to be scaled up and, in some of them, this is through strong organic growth and for some it's through buy-and-build."

He added that the GP was currently pursuing add-on acquisitions for portfolio company Lakers, an Oslo-based retailer of pumps for the wastewater industry that plans to expand further into Europe having already completed 11 add-on deals. Additionally, it is looking for add-ons for listed software company EcoOnline, which it exited from its debut fund, but is still invested via its second fund. Goldman Sachs acquired a minority stake in the company last year, and Indahl said that he would not rule out expansion into the US.

Accounting for ESG
The GP has started using Impact Weighted Accounts, an initiative launched by Harvard Business School that adds a company's positive and negative impacts on employees, customers, the environment, and the broader society onto financial statements.

Indahl says the initiative is an "excellent way of monetising externalities and impact. For instance, you can either look at a company's internal practices and see how much CO2 it emits or what pay gap it has, but with Impact Weighted Accounts, you can go further than that, because it also looks at your products and services and the cost or benefit of your products to the society. For instance, an oil and gas company may have a very energy-efficient way of producing oil or gas, but the actual product is not very good, is it?"

He adds that by using this way of accounting for the environment, the GP could compare the true cost for its portfolio companies of CO2 emissions and the true income of the avoidance of CO2 with the reported revenues and profits in the portfolio, to assess what the revenues and profits would be if all externalities were accounted for in the profit and loss. 

If all investors did that, Indahl says, they would be able to quantify impact and future-proof their portfolios by seeing the value creation potential, as well as the risk, in the portfolio: "We have provided strong returns to our investors, and it is co-linear with positive returns to society. More and more investors will see that going forward."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• GPs
• Nordics
• In Profile