Sources of income

CapMan has two operational segments: its Management Company business and its Fund Investment business. The Management Company business handles the management of CapMan’s private equity funds, which invest in portfolio companies and real estate, and its income is derived from fees, including management fees paid by the funds and other service fees, as well as carried interest received from funds. Fund investments comprise CapMan’s own fund investments and its investments in Maneq funds; income is based on the changes in the fair value of these investments and realised returns. In addition, CapMan owns 28.7% of investment company Norvestia Plc. The impact on CapMan's result comes from the change in the fair value of the associated company. 

Fee income

Fee incomes comprises management fees from funds and other service fees.


As a fund manager, CapMan receives management fees during a fund’s entire period of operations. This fee is typically based on the fund's original size during its investment period, which is usually five years. Thereafter the fee is typically based on the acquisition cost of the fund's remaining portfolio.


Annual management fees are usually 0.5-2.0% of a fund’s total commitments, depending whether the fund is a real estate fund, a mezzanine fund, or an equity fund. In the case of real estate funds, management fees are also paid on committed debt capital. The average management fee percentage paid by CapMan-managed funds is approx. 1%.          


Other service fees include fees from CapMan’s service business comprising purchasing scheme (CaPS), fundraising advisory services and other services related to fund management, among others.


CapMan aims to ensure that its fee income cover the Group's operating expenses. The latest fee guidance is presented in the most recent interim report, which is available in the Result section.

Carried interest income

Carried interest refers to the distribution of the profits of a successful private equity fund among fund investors and the fund manager responsible for the fund's investment activities. In practice, carried interest means a share of a fund’s cash flow received by the fund manager after the fund has transferred to carry. 


The recipients of carried interest in the private equity industry are typically the investment professionals responsible for a fund's investment activities. In CapMan's case, carried interest is split between CapMan Plc and funds’ investment teams. The table of funds published in CapMan’s interim reports details CapMan Plc’s share of a fund’s cash flow if it is in carry.


CapMan applies a principle where funds transfer to carry and carried interest income are based on realised cash flows, not on a calculated and as yet unrealised return. As the level of carried interest income varies, depending on the timing of exits and the stage at which funds are in their life cycle, predicting future levels of carried interest is difficult. 

When does a fund transfer to carry?

To transfer to carry, a fund must return its paid-in capital to investors and pay a preferential annual return on this. The preferential annual return is known as a hurdle rate, which is regularly set at 8% IRR p.a. When a fund has transferred to carry, the remainder of its cash flows is distributed between investors and the fund manager. Investors typically receive 80% of the cash flows and the fund manager 20%. When a fund is generating carried interest, the fund manager receives carried interest income from all of the fund's cash flows, even if an exit is made at below the original acquisition cost.  In the past, an average time for CapMan funds to transfer to carry has been 6.6 years.


Noteworthy issues when assessing transfer to carry:


  • As a fund manager CapMan does not receive carried interest income from individual investments but rather from a fund’s overall performance. The first exits made by a fund do not typically generate carried interest income, because they still return paid-in capital to fund investors or annual preferential returns. These exits may, however, impact CapMan' s result through its own fund investments.
  • When analysing the timetable for a fund to transfer to carry, the ratio of cumulative cash flows already received by investors to paid-in capital needs to be examined.
  • The fair value of the portfolio, including any net cash assets of the fund, indicates the amount of distributable capital to investors at the end of the review period.
  • When estimating cash flow, it should be noted that some funds have capital that is not yet paid in.
  • Following any previous distribution of profits, new capital paid in, as well as annual preferential returns, must be paid to investors before a new distribution of profits can be made.

Why is carried interest distributed to the fund manager?

Carried interest is typically used in the private equity industry to align the interests of investors and fund managers. As the earnings potential represented by carried interest is very significant for a fund manager and its investment professionals, it is in their interest to manage investment activities as profitably as possible. Investors benefit from investment professionals being motivated to maximise everyone’s returns.  

Returns on CapMan’s own fund investments

Since 2002, CapMan has made significant commitments to the new funds that it has established, and is a significant investor in the funds that it manages today. CapMan’s aim is to invest 1-5% of the original capital of future funds, depending on fund demand and CapMan's own investment capacity. By investing in funds from its own balance sheet, CapMan aims to even out potential fluctuations in its financial performance, as income from these investments benefits the company more rapidly than carried interest income. Unlike other income sources, however, the income from CapMan’s own fund investments can be negative.


CapMan typically finances around 50% of its direct fund investments with debt financing, to enhance its return on equity. Investments impact CapMan’s financial performance through realised returns and fair value changes. The fair value of the portfolios of CapMan-managed funds is defined quarterly. The process used for doing this is described in more detail here.


CapMan's own fund investments

Fund value,
CapMan's share
of fund, %
CapMan Equity VII 5.2 5.3%
CapMan Buyout VIII 86.1 8.6%
CapMan Buyout IX 230.3 4.4%
CapMan Buyout X 170.0  2.5%
CapMan Mezzanine IV 39.0 2.9%
CapMan Mezzanine V 56.8 5.3%
CapMan Technology 2007 20.8 6.9%
CapMan Life Science IV 19.6 18.5%
CapMan Russia 75.8 4.7%
CapMan Public Market


CapMan Real Estate I 48.9 1.0%
CapMan RE II 124.8 1.3%
CapMan Hotels RE 326.9 1.5%
CapMan Russia II    9.3 2.0%
CapMan Nordic Real Estate 176.6 1.5%

* Fund value refers to portfolio at fair value and the fund's net cash assets at 31 December 2015. The figures exclude debt.

Income from associated company Norvestia

CapMan books its 28.7% share of norvestia at the Net Asset Value (NAV) of the associated company. The impact on CapMan's income is based on the fair value change based on the change in Norvestia's NAV. 


Norvestia invests in listed shares, bonds, hedge funds and equity funds. Furthermore, Norvestia makes direct minority investments in unlisted companies. More information about Norvestia's investment strategy is available on























































Commitments on the top of the columns, €25.2 million. Investments including Norvestia on the bottom of the columns, €95.9 million.