CapMan 2019: Buyouts with a fresh twist

February 27, 2020

CapMan has 30 years of private equity investment experience and was the company to establish the buyout as a form of financing in Finland. The world has changed radically over these past 30 years, but so has the life of Pia Kåll, the captain at the helm of CapMan Buyout today. Three decades ago, she was in elementary school and dreamt of a life as a heptathlete, an artist or a mechanic. She proved skilled in many other areas as well, and following a degree from the Polytechnic University of Helsinki, a career in management consulting and a management group position in an industrial company, she has headed CapMan Buyout since 2017.

There is an abundance of private equity investors. What makes CapMan Buyout unique?

– We utilise 30 years’ worth of know-how, which we can implement with a fresh take. We have seen a broad cross-section of the Nordic business environment and M&A transactions. In our team, experienced professionals meet the new generation in a seamless manner. We bridge the Baltic Sea as our team is split between Helsinki and Stockholm and we call both places equally our home. Most private equity players investing in mid-market Buyouts only operate in one market, Kåll explains.

An indicator of the trust that our investors place in us is the establishment of the eleventh CapMan Buyout fund in 2019. This means that the strategy to invest in mid-market Nordic unlisted companies has proven effective eleven times in a row. CapMan Buyout’s handprint is visible in 80 companies.

The long track-record of the investment area is also an indication of a successful generational shift: Many other industry players still have this ahead of them and if no natural successor is identified for existing key partners, continued operation might be at risk. Of CapMan Buyout’s original team, there is no-longer anyone operationally involved in the business or in the decision making for the new fund.

A new fund and new investments

CapMan Buyout approaches potential investments today in a different manner compared to the early years.

– We are structured and approach a new potential deal from an analytical perspective. Excel, which of course is a dear tool for investment professionals, has been challenged by business intelligence tools. We focus on fast and data-driven decision making and follow the development of our portfolio companies as well as deal flow almost in real time through applications, says Kåll.

The team implements the same investment strategy as in the predecessor fund. The fund acquires majority stakes in mid-sized Nordic businesses.

– We don’t see a benefit in increasing fund size only because capital is available. We have to be able to invest that capital in a sensible manner and the current target size for the fund allows us to invest in the market segment that we consider most intriguing. The broad personal network of our entire team is in a pivotal position in accessing potential investments. This network grows following each successful transaction, Kåll reminds.

Local expertise is emphasised in value creation together with portfolio company management as well as with advisor networks. It is important that the investment team has enough contact with the market in which a portfolio company operates, recruits and grows. Even though the business environments are similar, business cultures in Finland and Sweden differ from each other. Therefore, success requires local presence and mindset.

We look for boldly individual companies

Ideally, a CapMan Buyout portfolio company is a niche market leader willing to grow. In addition, the team values courageous companies that are genuinely individual.

– Company culture is increasingly important as it allows for businesses to live the brand and speak to the customers, but also recruit the best people. We evaluate a potential portfolio company’s culture and leadership before making an investment. A successful culture and its development further is a key focus area in our investments. Company culture is visible in the commitment of the portfolio company’s employees to the company’s values, which forms a foundation for our value creation plan, says Kåll.

Diversity is becoming a factor in the C-suite

One of the most important tasks of a private equity investor is the formation of a company’s board of directors and the recruitment of management. Diversity is an important aspect of this process. Because CapMan Buyout makes majority investments, the team has excellent opportunities to influence and form core teams following the individual requirements of each portfolio company.

– Research shows that diverse organisations perform better compared to homogenous organisations. We evaluate the know-how of portfolio companies from many different angles and strengthen them for example with expertise from Nordic markets more broadly. This brings new perspective especially to businesses in the process of internationalisation, says Kåll.

Diversity in the private equity industry is a hot topic globally and in the past, the industry has not distinguished itself favourably in this regard. Level 20 is an initiative originated in the UK with the purpose to promote diversity within the private equity industry. Kåll launched the Nordic chapter of Level 20 last autumn. Kåll’s responsibility of the Buyout team is an example of functioning diversity in practice and may serve as an inspiration to other Nordic Buyout firms to promote diversity in their ranks.

 

Read more in our 2019 Annual Report.