Summa Equity raises SEK 4.5bn debut fund

The Nordic lower-mid-market GP said in a statement Summa Equity Fund I (SEF I) had surpassed its initial SEK 3.3bn target and seen demand exceeding the SEK 4.5bn hard-cap.

Summa co-founder and former Altor partner Reynir Indahl spoke to unquote" about the firm's strategy in April 2016, after the firm's maiden investments – Sortera and eGain. At the time, sources with knowledge of the fundraising process said the GP was looking to raise €300m for a vehicle with a classic buyout structure.

Indahl said at the time that Summa would have a thematic focus, making investments in companies with growth in excess of the general economy's, and business models driven by resource scarcity, energy efficiency or changing demographic trends, with a data and digital angle. He cited the global struggle for growth, with the IMF and World Bank lowering economic growth prospects, as well as an ageing demographic in the west, growing world population and climate challenges as drivers of strong growth in the special niche industries Summa will target.

In a statement, Summa said it intends to strike a strong environmental, social and governance (ESG) profile, and will be the first Nordic private equity firm to report towards the United Nation's Sustainable Development Goals – a set of 17 targets the UN hopes to achieve by 2030.

Partner and co-founder Jenny Keisu told unquote" the vehicle's carried interest model differs from the industry standard, as it is linked to the net returns of SEF I's LPs, so that the carry varies depending on performance.

Summa Equity Fund I will be domiciled in Sweden and regulated as an Alternative Investment Fund (AIF) under the Swedish financial conduct authority, Finansinspektionen, with fund administration also in Sweden. It features a 10-year lifespan with an option to extend.

The firm will be based in Stockholm and Oslo. Placement agent Rede Partners led the fundraising efforts for Summa, with Mannheimer Swartling and Ropes & Gray acting as legal advisers.

Investors
According to a statement by Summa, SEF I is backed by a combination of pension funds, foundations, insurance firms, fund-of-funds and endowments – such as University of Michigan, which committed SEK 345m, according to University documents. LPs in the fund are based in the Nordic region, Europe and North America.

Keisu said she and her co-founders had wanted their fund to have a strong focus on ESG, transparency and sustainability, and were pleasantly surprised by the positive reaction the pitch was met with by investors. The fund's LP-base includes investors with impact and sustainability mandates, mainly among the smaller backers.

Given the fund's strategy of targeting lower-mid-market assets, co-investments are unlikely to be a feature of the fund, Keisu said.

Investments
Summa will look to invest in buy-and-build cases, taking stakes of 80% or more and committing equity tickets in the €10-50m range, with the average commitment likely being around €35m. Keisu said Summa expects to make around 12 investments from the fund.

The firm's strategy will differentiate itself from its Nordic competitors in the small- and mid-cap spaces by its sectoral approach and pan-Nordic investment strategy, in a space where most funds are generalist players with a single-country focus, Indahl told unquote" in April. Summa's choice to play in the lower end of the market was in part a result of the limited opportunities there would be in the mid-to-large bracket, given the firm's sectoral strategy.

SEF I has made two investments to date, both in April 2016. It acquired Nordic waste collection and sorting business Sortera from Norvestor, and took a majority stake in Swedish energy monitoring and control systems maker eGain from investment company Ceder Capital.

The equity size of the Sortera and eGain buyouts were roughly in the middle of the GP's range.

A third investment has been completed and will be announced next week, Summa said.

People
Summa Equity – Reynir Indahl, Johannes Lien (co-founders, partners); Jenny Keisu (co-founder, partner, COO); Christian Melby, Tommi Unkuri (partners); Hannah Jacobsen (associate).

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• Topics
• Buyout
• Nordics
• Altor
• Nordic Capital
• Sweden
• Mannheimer Swartling
• Ropes & Gray
• ESG