CapMan acquires Swedestart for EUR 17m

CapMan plc has acquired the entire share capital of Swedestart Management AB, one of the leading Swedish venture capital companies. The move follows CapMan’s establishment of a presence in Denmark through the acquisition of Nordic Private Equity last year. Swedestart manages EUR 160m of capital in four funds. The company has a team of 12 employees, eight of whom are investment professionals, and is one of Sweden’s most experienced and successful venture capital firms. As a result of the acquisition, CapMan has gained a foothold in the Swedish venture capital and private equity market, and significantly strengthens its position as one of the leading private equity investors in the Nordic region with approximately 70 employees in Helsinki, Stockholm and Copenhagen.

The transaction value is approximately EUR 17m, which will be financed by a combination of a cash payment and a direct share issue of 4,500,000 new B shares to the three owners of Swedestart Management. As a result of the deal, Swedestart’s three owners will become senior partners at CapMan, with 5.9% ownership of the share capital of CapMan plc. The new shares are not entitled to a dividend payout from 2001 and are not subject to the same lock-up agreements as the shares owned by CapMan’s other key personnel. Following the direct share issue, the number of CapMan plc B shares will increase to 67,694,630 and the share capital, including A shares, to E756,946.30.

CapMan plc will begin to receive between 4-20% of carried interest generated by the Swedestart II fund, which is fully invested. CapMan’s share of carried interest will depend on the success of future exits. In addition, CapMan will receive 12% of carried interest from the Swedestart Tech fund and 10% of carried interest from the Swedestart Life Science fund. These two funds are relatively new and have so far invested in only a few companies.

Swedestart’s technology investments focus on companies in the IT and telecommunications sectors, making its investment strategy very similar to that of CapMan’s technology activities. To date, the funds managed by Swedestart have invested in 24 portfolio companies and have successfully completed 11 exits, providing very healthy returns to investors such as Skandia, Arbetsmarknadens Försäkringsaktiebolag (AFA), Försäkringsbranschens Pensionskassa (FPK) and the 6th AP-Fund. As of January 2002, the net annual IRR for Swedestart I fund (established 1995) was over 40%, and for Swedestart II (established in 1998) was over 180%.

Ari Tolppanen, CEO of CapMan plc, comments: ‘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 and telecom investments and mezzanine investments. We will immediately start to build the buyout team in Sweden. Swedestart provides CapMan with an excellent opportunity to expand its operations into the life science market, enabling us to raise a fund to co-invest with Swedestart’s Life Science Fund.’

The intention is that CapMan and Swedestart will offer mutual co-investment rights. The funds managed by CapMan will have the option to invest in all of Swedestart’s new technology deals, and Swedestart’s technology fund will have the option to invest in all CapMan’s new technology deals. As soon as Swedestart’s and CapMan’s current funds are fully invested, CapMan and Swedestart will start raising common Nordic funds.

CapMan and Swedestart will immediately start to work closely together, especially on the Nordic technology deal flow. Together, the two firms have made 46 technology investments within IT and telecommunications.

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