The European Investment Bank invests EUR 30 million in CapMan's fund.
The European Investment Bank (EIB) has today signed an agreement to invest in the Finnmezzanine Fund III, CapMan's newest Mezzanine fund. EIB's investment amounts to EUR 30 million (approximately FIM 180 million).
This investment will be EIB's largest private equity investment in the Nordic countries and the third one in CapMan's funds. EIB has now in total invested approximately EUR 64 million (FIM 380 million) in CapMan's funds.
According to Ewald Nowotny, EIB's Vice President, the investment in CapMan's new fund is an interesting opportunity with regard to its Nordic dimension. "We are very satisfied with the co-operation with CapMan due to the successful investment activities of CapMan's previous funds," Nowotny explains.
EIB's resources to be allocated to private equity investments have been doubled to EUR 2 billion
Through its venture capital investments, the EIB wants to support the development of high-tech and fast growing SMEs in their local market as well as in their internationalisation process. "Our goal is to foster innovation and the knowledge-based economy within the EU. The EIB is ready to boost its involvement as the EU Finance Ministers have doubled to EUR 2 billion the total resources available for EIB venture capital operations. Of this amount, some EUR 1.3 billion in equity investments has been approved," says Nowotny.
Ari Tolppanen, President of CapMan, highlights the fact that the co-operation with EIB has been of great significance to CapMan. "The size of our funds as well as our investment opportunities have increased substantially. At the same time, we have had the opportunity to have a very professional international co-operation partner," states Tolppanen.
The EIB has previously invested EUR 17 million (FIM 100 million) in Finnmezzanine Fund II and EUR 17 million (FIM 100 million) in Finnventure Fund V.
After EIB's investment in Finnmezzanine Fund III, the Fund's size is approximately EUR 150 million (FIM 900 million). In addition to EIB, there are 20 domestic investors in the Fund. Finnmezzanine Fund III is CapMan's third mezzanine fund and the eleventh equity fund in total.
Mezzanine financing is well-suited even to companies preparing an IPO
Finnmezzanine Fund III focuses mainly on Finnish and other Nordic growth companies. The size of a typical single investment in a company is EUR 3-16 million (FIM 20-100 million)."Mezzanine does not affect the ownership structure of the company. It is a flexible instrument, which we believe will become increasingly popular also in Finland and other Nordic countries. Due to the nature of the instrument, Mezzanine financing is well-suited also to companies preparing an IPO with the purpose of increasing the equity ratio or of financing a transition phase," Tolppanen explains.
Mezzanine financing comprises all forms of financing that are not equity or traditional debt financing, requiring collaterals, but ranks between equity and debt. Examples of such forms of financing are loans with warrants, capital loans, convertible bonds, and various profit sharing loans. As to the risk profile, Mezzanine financing is between equity and debt. The return targets are therefore also lower than in equity financing.