Buyout investments in growth companies near all-time high – Finnish companies raise €480 million in the first half of 2018

The Finnish Venture Capital Association (FVCA) has gathered the statistics from H1/2018 for buyout investments made in more established growth companies in Finland.

Finnish growth companies raised a total of €480 million in buyout investments during the first half of 2018. Investment activity among Finnish buyout funds is near all-time high in terms of value and number of investments.

Buyout investments raised by Finnish later stage growth companies in the first half of 2018 totaled €480 million, already nearing all investments made in the entire previous year. 56 Finnish growth companies received an investment from either a domestic or foreign buyout investor over the first six months. The average size of investment received by a growth company was €8.6 million.

Finnish buyout funds are investing actively

The term buyout is used to describe management’s various forms of acquiring stake in a company. In 2017, a total of €636 million was raised by Finnish buyout funds. The past year was an indication of heavy investment activity by domestic buyout funds.

Now is a favorable time for entrepreneurs to approach private equity investors who are currently searching for new investment opportunities. An investor brings the needed know-how and thus accelerates a company’s growth considerably. The help that companies typically need is related to managing the board, recruitments, business plan renewals and internationalization”, comments Pia Santavirta, Managing Director of FVCA.

Finnish buyout funds invested a total of €303 million in 53 growth companies over the first half of 2018. B2B companies comprise a large share of all buyout investments, while companies in industries such as energy and environment are also gaining more interest.

Together with the entrepreneurs, private equity investors help the company reach a new level of growth, which in turn attracts top talent to companies owned by investors. It’s fantastic that growth companies are seen as interesting opportunities for career development. Each successful growth story gives rise to new top-level international talent in Finland, and this speeds up overall development in Finland for the future as well“, Santavirta rejoices.

A clear majority of investments by domestic buyout funds are directed towards supporting the growth and internationalization of domestic companies.

Typical challenges that Finland and Finnish companies face for achieving growth are the lack of risk-taking and internationalization. Private equity investors are suited to creating a strong cluster of SMEs, something that Germany has but currently is absent from Finland. A large group of companies exists in Finland with high growth potential that are on the verge of a generational change. These companies need support to finance that change and continue their development further“, Santavirta explains.

While the growth of Finnish companies is supported by domestic buyout funds, Finnish companies are also attracting considerable foreign capital. Foreign buyout investors invested a total of €194 million in five Finnish companies during the first half, implying that foreign investors are taking part in particularly large investment rounds.

The sell-off activity among Finnish buyout funds stayed relatively high as 24 target companies moved over to a new owner. Industrial acquisitions and IPOs remain as prominent exit routes for buyout investors.

Additional information:

Pia Santavirta
Finnish Venture Capital Association, Managing Director
+358 40 546 7749

Finnish Venture Capital Association (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., @FVCAfi