CapMan as an investment

CapMan is one of the world’s few listed private equity fund managers. By investing in CapMan shares, investors have the opportunity to benefit from value created across a portfolio of Nordic and Russian companies and real estate. CapMan’s B shares have been listed on the Helsinki Stock Exchange since 2001.

Business fundamentals

As a private equity fund manager, successful fundraising and a sufficient level of capital under management are fundamental to CapMan’s business. Successful fundraising requires performance, i.e. that the returns paid by CapMan’s funds meet the target levels set by the institutional investors investing in them. The long-term success of CapMan’s business depends therefore on the success of the investments made by its funds, in practice on how well it identifies investment opportunities, develops the value of portfolio companies and real estate, and realises value through well-timed and well-managed exits.

Long-term business

CapMan funds typically have a 10-year life cycle and most investments are held for four to six years. Risks are spread over a number of individual investments, none of which typically account for more than 15% of a fund’s total capital. CapMan aims to invest in portfolio companies and real estate on a steady basis, irrespective of fluctuations in the economic cycle, and make the most of price differentials between the countries in the Nordic region by leveraging the region’s extensive deal flow and buying companies in countries that offer attractive purchase prices. CapMan aims to exit its investments at the optimum time.

The long-term nature of CapMan’s funds and investment activities has an inevitable impact on its financial performance, which should always be analysed over a longer time span than the quarterly cycle. CapMan’s main sources of income are described in more detail here.

Financial targets

CapMan Plc announced the following financial targets in February 2011:

 

 

Target

Performance in 1-12/2013

Profitability

Return on equity of over 20% p.a.

2.0% p.a.

Capital structure

Equity ratio of at least 60%

58.9%

Dividend policy

Payout ratio of at
least 50% of net profit

Boards proposal to AGM:
a dividend of EUR 0.04 per share will be paid.


 

CapMan has not set a separate growth target. CapMan believes that growth in the private equity investment sector will continue and that CapMan will benefit from the opportunities this will offer, particularly in its core investment areas.

 

 

 

 

Why invest in CapMan?

  • Return potential of unlisted companies:
    • Opportunity to access the value generated by unlisted Nordic and Russian companies and Nordic real estate.
  • Attractive earnings model:
    • Highly predictable fee income.
    • Funds in carry have earnings potential whenever a portfolio company or real estate is exited. 
    • Significant upside from carried interest and own fund investments.
  • Diversification benefits: Large number of funds under management and multiple individual investments spread the risk of the investment.
  • Dividend policy: CapMan's targeted payout ratio is at least 50% of its net profits.
  • Alignment of interests: Management and personnel own approx. 25% of CapMan.