GP Profile: CapMan

Click here to view a complete profile of CapMan, including details of funds, LPs and investments on unquote" data 

Just five months after CapMan announced the launch in February of CapMan Infra to invest in Nordic mid-cap infrastructure assets, news hit of CapMan Growth, which is targeting a €80m close by year end, signalling the further diversification of the firm's approach. The group has come a long way since it started life as a pure private equity house in 1989, and now comprises seven different investment strategies.

The continued drive to expand into new product lines is more of a help than a hindrance, according to recently appointed CEO Joakim Frimodig. It means the team can approach a company and find the suitable strategy, rather than being constricted by a certain product, he says. As a result, the firm has a better chance because it has a suite of offerings.

As of today, CapMan's product range of seven strategies totals €2.7bn in capital under management. The firm has made 200 investments since 1989, across all strategies.

We are traditionally Nordic-based in every way, as we have boots on the ground in Sweden, Denmark and Finland" – Joakim Frimodig, CapMan

In addition to the two initiatives launched this year, strategies include CapMan Buyout, which invests in unlisted Nordic mid-market companies in various industries; CapMan Real Estate, which manages four private equity real estate funds that invest in Nordic office, retail, residential and hotel properties; CapMan Russia, which provides equity financing for Russian growth companies with the investment focus on growing non-strategic sectors that benefit from the country's expanding middle class; CapMan Credit, which advises CapMan Mezzanine V Fund investing in subordinated debt primarily supporting leveraged buyouts in the Nordic region; and Norvestia, which invests in listed shares, bonds, hedge funds and equity funds. Norvestia also makes direct minority investments in unlisted companies. By calculating in AUM, real estate is the biggest of CapMan's businesses.

There have been 10 buyout funds to date, the latest being Buyout X, which raised €245m in 2013. There is still room for one or two investments in the Buyout X fund, according to Frimodig.

On average – in the buyout strategy – there are 8-10 investments and €250-400m in each fund, making the average equity ticket size between €15-50m.

As a rule, the manager invests in mid-sized unlisted Nordic companies such as sauna heater manufacturer Harvia and infrastructure services company Eltel. There are currently 18 live portfolio companies with a combined annual turnover of €1.75bn. There have been 59 exits so far with a gross exit multiple of 2.9x.

LP expansion and new horizons
The group has approximately 120 LPs at present, most of which are Nordic. "Our strategy is to expand our LP base internationally, as well as into the tier two [LP] investor [group]," says Frimodig, adding that the real estate strategy already has more international LPs to its name. In fact, the latest Nordic Real Estate fund of €425m is composed of investment commitments with one third from the Nordic region, one third from Europe and one third from North America.

"We are traditionally Nordic-based in every way, as we have boots on the ground in Sweden, Denmark and Finland."

In terms of recent developments, the announcement of a growth equity strategy is a big one. Indeed, it was inspired by another less recent development in the guise of the acquisition of Norvestia. The vehicle is the GP's first growth fund and is being built on Norvestia's growth business model. CapMan acquired the Finnish investment firm in a €118m deal in late 2016. Juha Mikkola had been head of Norvestia's growth equity team since 2011 and is now growing the business under the CapMan umbrella.

 "This growth equity investment strategy is between venture and buyout, and will be focused on minority-stake investments in fast growing companies," says Frimodig. Since this is the first fund of its kind for CapMan, it will stay on home ground and focus mainly on Finland as the source of its investments.

Another potential development on the horizon is the exploration of an opened-ended fund: "We are working towards this more flexible offering for our clients and we have already started to look at some interesting products in this category," says Frimodig.

Given CapMan's balance sheet, the GP has the capacity to invest itself and although it has not done much direct co-investment from the balance sheet, it does invest from the balance sheet directly into its own funds.

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