CapMan Growth closes second fund on €97m

The new vehicle is bigger than its predecessor, which held a final close on €85m in December 2017. Managing partner Juha Mikkola told Unquote that the GP "could have raised a bit more" but that its strategy is "to roll over smaller funds quite often rather than doing a big fundraising every 4-10 years."

The fund held a first close on €74m in July 2020 and, according to the GP, was ready to hold a final close then but "wanted some specific names to join, and it took some time for them to make their internal decisions, which is why we delayed it until now", Mikkola said.

The GP's own commitment to the second growth fund is slightly more than €10m.

No placement agents or advisers were used for the fundraise. Mikkola described the process as "very easy", adding that no physical meetings took place for the fundraise.

The second growth fund will serve as an alternative to small buyouts. "We want to invest as a minority, and the entrepreneurs can keep the controlling stake in the business," Mikkola said. He added that the GP is able to buy secondary shares alongside making minority investments, and often did both when investing from its previous fund. 

Investors
There are 40 LPs in total in CapMan Growth II, with existing LPs representing 90% of the commitment to the fund. Around 30 LPs are "some of the most successful Finnish entrepreneurs", according to Mikkola, including Ilkka Paananen, Mikko Kodisoja, Aaro Cantell, Jarkko Veijalainen and Georg Ehrnrooth. The rest of the LP base are institutional investors.

Mikkola said the LPs represent a different vertical or industry knowledge, ranging from healthcare, fintech, logistics, software and IT services. "We wanted to get a very good balance of know-how to grow our circles," Mikkola told Unquote. 

Investments
CapMan Growth II will target growth-stage companies based in Sweden, Estonia and Finland. It will make minority investments in 8-12 companies with turnovers of €5-100m, investing equity tickets of €3-20m, some of which will be in the form of co-investments.

The fund is agnostic in terms of sectors, and will look at tech and service companies "as long as they have potential to internationalise operations", Mikkola said

The fund has already made two investments, the first being in Neural DSP in July.

Its second investment was in Finnish company Unikie. The GP invested €6m, while LPs Tesi and Georg Ehrnrooth co-invested €4m and €2m, respectively. 

Founded in 2015 and based in Helsinki, Unikie is a developer of software technology platforms for autonomous vehicles. The company employs 300 people and had a turnover of €26.9m in 2019. 

CapMan had been in negotiations with Unikie for over a year. Mikkola said the deal was delayed due to Covid-19-related restrictions, which slowed down negotiations. He also said they wanted to find a new CEO for the business, and that the GP had "found an excellent person who will start at the beginning of the year", Mikkola said.

PwC and Dottir acted as financial and legal advisers to the GP on the deal.

The GP said its pace of investment for the new fund is likely to be a bit faster than for its previous fund, as it has a bigger team this time. Said Mikkola: "We expect to invest the fund in two, or a maximum of three, years, and raise a €100m-ish fund every three years." 

The GP expects to sign a third deal in Finland before the end of 2020.

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