February 18, 2020
In 2019, we celebrated 30 years as private assets frontrunners. During these years, we have invested in more than 200 companies and 200 real estate assets, created 10 new listed companies, raised more than €6 billion in capital and our private equity funds have returned on average 12 per cent per annum. Despite growth and diversification, the core of our activities has remained stable and we are guided by active value creation.
CapMan—a private assets powerhouse
Our vision is to be a Nordic private assets powerhouse. What do we mean by this? Being Nordic is part of our DNA. By private assets, we mean that we focus on all areas of the private market sphere—not only private equity in its most traditional form, but also private real estate, infrastructure, credit and related services. And by being a powerhouse, we strive to be more than just an investor or a capital allocator.
We want to be a larger force in society than implied purely by our size, and truly make a difference.
We implement our strategy in a structured manner
2019 was a fast-paced year with progress according to all aspects of our strategy:
- New investment strategies. During the past three years, we have raised almost €1.5 billion in new capital under management for six different strategies. Fundraising momentum continued strong in 2019, during which we established new Buyout and Hotels Real Estate funds.
- New product and service solutions. During the past three years, we have launched several new products and solutions, such as open-ended funds, club investments and investment mandates in response to investor demand. Our new Hotels Real Estate fund is an example of a long-term semi-open-ended fund structure. As an example of a new service concept is JAM Advisors, of which CapMan acquired a majority stake in February 2019.
- Expanded customer segments and strengthened distribution. We have successfully expanded our international customer base while at the same time strengthening our relationships with smaller customer segments. In autumn 2019, we partnered with Nordea regarding the distribution of CapMan Nordics Property Income Fund, a non-UCITS fund.
- Top professionals. Capable people are pivotal to success. Therefore, a key strategic focus area is to attract and retain top professionals to CapMan. In addition to employees with a long history at CapMan, we have a lot of new talent. Of CapMan’s Management Group, 75 per cent were appointed in the past three years, while 46 per cent of all employees have joined the company during the same time.
Successful value creation is at the core of our activities and builds on the four themes mentioned above. Value creation supports fundraising and as a result the profitable growth of CapMan’s management fees. Value creation also has a direct effect on the return on our own investments. We have allocated the majority of our balance sheet in private assets, mainly our own funds.
Global trends support our strategy
Our strategic focus areas are in line with general industry megatrends. Private assets are a growing market and according to research, the size of the private assets market has tripled in the last 12 years. Additional growth potential remains plentiful, as the private assets market accounts for only 12 percent of the value of the listed market.
In addition to growth, the private assets market has diversified with the introduction of new market segments. Real estate, infrastructure and private debt investments attract capital and complement traditional private equity investing. Different products also provide diversification benefits for customers.
Private assets have historically offered higher returns compared to other asset classes. This development is evident both in the Nordic markets as well as internationally. A more attractive return profile indicates that a more diverse investor base is interested in investing in private and assets and the alternatives asset class. Recently, new products and structures have become available also for investors, who have traditionally not had access to closed-end funds. CapMan’s strategy is well-aligned with this development.
Profitable growth and a growing dividend drive shareholder value
CapMan’s strong growth continued in 2019. Our turnover grew by 46 per cent, our comparable operating profit grew by 110 per cent and our comparable earnings per share grew by 115 per cent. As a result, we reached or are approaching all financial objectives that we established following our strategic review a couple of years back. Our management fees and fees from services grew by 30 per cent, while our growth objective was to exceed 10 per cent. Our return on equity was 16 (objective to exceed 20 per cent). Our equity ratio was 60 per cent (objective to exceed 60 per cent). Our objective is to pay an annually increasing dividend, and the Board of Directors proposes to grow distribution per share to 13 cents for 2019. Our distribution per share has grown for seven years in a row.
The strong financial development is also reflected in the total return development of our share, which was +64 per cent in 2019. The development significantly beat the performance of the Nasdaq Helsinki general index, although stock markets experienced a strong year in general.
The positive development last year demonstrates that we have created a solid and diverse foundation, on which to build future growth. Following a change in the shareholder base at the end of last year, I have taken a stake in the company functioning as CapMan’s largest shareholder. This arrangement increases my personal commitment to the execution of CapMan’s profitable growth and the creation of shareholder value, while ensuring that long-term conditions for a growing dividend are in place.
Read more in our 2019 Annual Report.