Annual Report 2014

Impact

Finnish Industry Investment promotes Finnish business, employment and economic growth through venture capital and private equity investments and using international networks. Finnish Industry Investment promotes the development and internationalisation of Finland’s private equity and venture capital market through investments in funds. By co-investing in direct investments together with private investors, Finnish Industry Investment strengthens the competitiveness and growth potential of companies in promising sectors. 

Risk capital plays a key role in economic growth through funding and developing businesses. In addition to capital, investors bring valuable expertise and networks to portfolio companies. Alongside financial returns, Finnish Industry Investment attempts to create a positive impact on the surrounding economy and society. The impact of private equity and venture capital investment can be seen in the growth in companies and employment, a well-functioning risk capital market, and in the renewal of economic structures.

Portfolio companies grow by an average 3%

The revenues and jobs generated in Finland by Finnish Industry Investment’s portfolio companies grew in 2013 by some 3% compared to the previous year. Overall, Finnish Industry Investment’s portfolio companies generated net sales of roughly €4 billion and employed some 36,000 people.

M-Files Corporation is a splendid example of a Finnish company undergoing strong international growth. The company develops document management systems. In 2014 M-Files increased its net sales by €22.2m, representing 76% growth on the previous year, and recruited 80 new employees.

Catalysing venture capital

Finnish Industry Investment co-invests with private investors in such a way that at least one-half of the investment comes from the private investors. In 2014, Finnish Industry Investment made investments amounting to €64m in Finnish companies that are growing and internationalising as well as in Finnish private equity and venture capital funds. Altogether almost half a billion euros of capital was channelled into these investments, seven times more than the amount invested by Finnish Industry Investment.

Investment class FII's investment Total investment Leverage factor
Fund investments €25m €346m 13,8x
Direct investments €39m €177m 4,6x
Total €64m €523m 8,2x

Almost €200m capital channelled into Finland through FII’s network

Venture capital and private equity markets have become more international in Finland also. Finnish Industry Investment promotes internationalisation by actively investing in international private equity and venture capital funds that invest in Finland and by co-investing in Finnish growth companies together with private investors. During 2014 almost €200m of international capital was channelled into Finland through Finnish Industry Investment’s network. Of this, one-half went into Finnish private equity and venture capital funds and one-half comprised direct investments in Finnish growth companies. An international investor was involved in one-half of the direct investments made by Finnish Industry Investment. International investors invested €82m this way, three times the amount invested by Finnish Industry Investment.

FoF Growth funds as market developers

One of Finnish Industry Investment’s main objectives is to promote the development and diversification of Finland’s private equity and venture capital market. The goal is to increase the supply of risk capital, eliminate market deficiencies and lower the threshold for new market entrants.

The FoF Growth funds are funds-of-funds, co-established with Finnish pension institutes, that invest in Finnish private equity and venture capital funds and manage assets amounting to €265m. The FoF Growth II fund is the second consecutive fund-of-funds managed by Finnish Industry Investment and investing in Finnish growth funds. The €130m fund started its investment operations at the beginning of 2014. By the end of 2014, FoF Growth II had made investments amounting to €25m in two funds.

FoF Growth II continues the investment operations of FoF Growth I, which ended at the end of 2013 when it became fully invested. The investments of the first fund in 11 Finnish growth funds catalysed a total of over €830m capital for funds investing in Finnish growth.

Investing in industrial renewal

In 2014 Finnish Industry Investment launched the €100m Industrial Renewal investment programme, which during the year made investments amounting to over €20m in 10 companies. The aim of the programme is to promote the renewal, competitiveness and international growth of Finnish industry and of the companies serving it.

The programme’s largest single investment was in the joint acquisition of the Turku shipyard by Finnish Industry Investment and the German company Meyer Werft. The acquisition enabled the shipyard to continue operating, ensured numerous new orders for vessels and saved thousands of jobs, both at the shipyard and in its subcontracting network.

A second important event was a follow-on investment in Valmet Automotive Inc., where production of the Mercedes Benz A-Class was ramped up to full speed during 2014. The production launch created hundreds of new jobs in the company.

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