CapMan Plc has signed an agreement to acquire the entire share capital of Swedestart Management AB, one of the leading venture capital companies in Sweden. Swedestart manages EUR 160 million of capital in four funds. The company has a team of 12 professionals and is one of Sweden’s most experienced and successful venture capital companies. As a result of the acquisition CapMan gains a large foothold in the Swedish venture capital and private equity market, and significantly strengthens its position as one of the leading private equity investors in the Nordic countries with approximately 70 employees in Helsinki, Stockholm and Copenhagen.
The transaction value is approximately EUR 17 million. CapMan Plc will finance the acquisition by cash payment and a direct share issue of 4,500,000 new B shares to the three owners of Swedestart Management. As a result of the deal, Swedestart’s three owners will become senior partners of CapMan with 5.9 per cent ownership of the share capital of CapMan Plc. The new shares are not entitled to dividend from the year 2001 and they are subject to the same lock up agreements as the shares owned by CapMan’s other key personnel. Following the direct share issue, the number of CapMan Plc B shares will increase to 67,694,630 and the share capital, including A shares, to EUR 756,946.30.
CapMan Plc will begin to receive from 4 to 20 per cent of carried interest generated by the Swedestart II fund. The fund is fully invested. CapMan’s share of carried interest will depend on the success of future exits. In addition, CapMan will receive 12 per cent of carried interest from the Swedestart Tech fund and 10 per cent of carried interest from the Swedestart Life Science fund. The aforementioned two funds are new and have so far invested only in a few companies.
One of Sweden’s leading venture capital companies
Swedestart is one of Sweden’s most experienced and successful venture capital companies. The company manages approximately EUR 160 million of capital in four funds established in 1995, 1998 and 2000. Swedestart has a total of 12 employees, 8 of whom are investment professionals. Swedestart’s technology investments focus on companies in the IT and telecommunications sectors, making its investment strategy very similar to that of CapMan’s technology activities. To date, the funds managed by Swedestart have invested in 24 portfolio companies and made 11 exits with outstanding returns to investors. As at January 2002, the net annual IRR for the Swedestart I fund (established in 1995) was over 40 per cent and for the Swedestart II fund (established in 1998) was over 180 per cent.
Nordic growth strategy progresses
As a result of the acquisition, CapMan strengthens its position as one of the leading Nordic private equity companies.
“Through this joining of forces between CapMan and Swedestart, we are seriously establishing ourselves in the Swedish market, where our aim is to be strong and fully represented in all our business areas, i.e. buy-outs, IT & telecom investments and mezzanine investments. We will immediately start to build the buy-out team in Sweden. Swedestart provides CapMan with an excellent opportunity to expand its operations into the life science, enabling us to raise a fund to co-invest with Swedestart’s Life Science Fund” says Mr Ari Tolppanen, CEO of CapMan Plc.
Common Nordic investments
The intention is that CapMan and Swedestart will offer mutual co-investment rights. The funds managed by CapMan will have the option to invest in all new technology deals of Swedestart and Swedestart’s technology fund will have the option to invest in all CapMan’s new technology deals. As soon as Swedestart’s and CapMan’s current funds are fully invested, CapMan and Swedestart will start raising common Nordic funds.
The CapMan and Swedestart teams will immediately start to work closely together, especially on the Nordic technology deal flow. Combined CapMan and Swedestart have made 46 technology investments within IT and telecommunication.
“A significant presence in Nordic key markets enhances our possibilities to help our existing and new portfolio companies to grow and become international, and thus further increases the attractiveness of CapMan and Swedestart in the eyes of the entrepreneur”, says Mr Lennart Jacobsson, founder and Senior Partner of Swedestart.
“Swedestart strengthens CapMan’s competence in interesting technology areas and creates an excellent basis for recruitment of a high quality buy-out team. Close co-operation between the teams in Finland, Denmark and Sweden provides us an unique position on the Nordic market”, says Mr Heikki Westerlund, Managing Director of CapMan Capital Management Ltd responsible for CapMan’s investment strategy and investment activities in Finland.
