A recent study by the Finnish Venture Capital Association (FVCA) and KPMG shows that private-equity-backed companies are once again the fastest-growing companies in Finland: their growth in terms of turnover is nine times faster and in terms of number of employees five times faster than that of peer companies. According to the study, companies owned by private equity investors have fared much better than their peers during the Covid-19 pandemic.
The annual growth of companies that have received venture capital or buyout investments (later private equity) is significantly faster compared to peer companies: their turnover has increased by almost half (48.7%) and the number of employees by approximately one fifth (23.2%) annually. Companies were analysed for three years after they received an initial investment from a private equity investor.
Peer companies saw more moderate growth, as turnover increased by 5.5% and the number of employees by five per cent annually.
The investment activities of private equity investors have also continued actively throughout the Covid-19 pandemic. According to statistics published earlier in the spring, venture capital investments in Finnish startups broke all previous records in 2020. The amount of buyout investments made in more established growth companies remained at the level of previous years.
“During the pandemic, we have seen how private equity investors also help portfolio companies navigate challenging situations – not just helping them survive but also find new growth opportunities, for example through digitalisation,” comments Kenneth Blomquist, Head of Private Equity at KPMG.
“Finnish startups have received a record-breaking amount of funding, which has been used, for example, for developing new solutions for tackling climate change. We can be proud that Finnish companies are at the forefront of solving the challenges of our time,” says Pia Santavirta, Managing Director of FVCA.
Private-Equity-Backed Companies Significant Employers
The portfolio companies of private equity investors employ about 73,000 people in Finland. It is more than five per cent of the total number of employees in Finnish companies. In addition, some of the employees of Finnish private equity investors’ portfolio companies, approximately 10,000 employees, are located outside Finland.
“Private-equity-backed companies are significant employers. Finland has an ageing population, and these fast-growing, interesting companies can play a part in attracting much needed international talent to Finland,” Santavirta comments.
“The number of employees in companies owned by private equity investors grows five times faster than in peer companies, and a significant part of that growth comes from entirely new jobs,” Blomquist continues.
The combined turnover of Finnish companies owned by domestic and foreign private equity investors is over €25 billion. It corresponds to more than 5% of the total turnover of Finnish companies.
“Private equity investors share risk with entrepreneurs and bring their growth expertise to their portfolio companies. Together, investors and entrepreneurs create successful growth stories, building both stronger and more international SMEs to Finland as well as developing our innovative startups into becoming global leaders,” Santavirta concludes.
We studied the development of companies that received their initial investment between 2010 and 2017 over a three- and five-year period, e.g., for companies receiving an investment in 2010, the three-year review extends until 2013 and the five year period extends to 2015. During the 2010 to 2017 period, there were 240 BO companies and 272 VC companies that received their initial investment from private equity companies.
FVCA
Pia Santavirta, Managing Director
pia.santavirta@paaomasijoittajat.fi
+358 40 546 7749
KPMG Oy Ab
Kenneth Blomquist, Head of Private Equity
kenneth.blomquist@kpmg.fi
+ 358 40 752 0000
FVCA is the industry body and public policy advocate for the venture capital and private equity industry in Finland. As the voice of the Finnish VC and PE community and the entrepreneurs they fund, it is our role to demonstrate the positive impact of the industry on the Finnish economy. FVCA – Building growth.
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KPMG Finland is a member firm of the KPMG International. We are a global network of professional service firms providing audit and assurance, tax and legal, and advisory services. KPMG member firms operate in 146 countries, collectively employing more than 227,000 people. In Finland and Estonia, we have over 1500 employees and local offices in 21 Finnish and 2 Estonian cities.
