CapMan expands its operations to Russian market and acquires private equity house Norum

Transcription

1 CapMan expands its operations to Russian market and acquires private equity house Norum Heikki Westerlund, CEO, CapMan Plc Hans Christian Dall Nygård, Managing Director, Norum Petri Saavalainen, Senior Partner, Head of CapMan Russia

2 Contents Transaction CapMan Russia The Russian market 2

3 Why are we here? CapMan Plc has acquired private equity house Norum Sellers are the company s senior management, DnB NOR and Sitra Important strategic step for CapMan Part of CapMan s strategy to utilise the growth potential within alternative asset class and to expand geographically. CapMan will establish CapMan Russia investment area Norum team forms own CapMan Russia team Norum Russia Fund III transfers under the management of CapMan Norum is one of the leading teams in the emerging Russian private equity market 3

4 CapMan s growth strategy 2008 Expansion to Russia 2005 Expansion to real estate investments Offices in Denmark, Sweden and Norway 2001 Listing in Helsinki Stock Exchange Russia 1994 MBO Life Science Real Estate Mezzanine 1989 Technology Buyout CapMan established in 1989 as a buyout house. Expansion to mezzanine and technology investments in Nordic growth strategy Expansion to life science investments in Utilising growth potential in alternative asset class and geographical expansion

5 CapMan today Unique listed alternative asset manager Manages specialised third party private equity, venture capital and real estate funds Tradition to launch new products Currently five investment areas with dedicated teams and funds Offices in Helsinki, Stockholm, Copenhagen, Oslo, Moscow and St. Petersburg Pioneer in Nordic private equity alternative asset investing Established in 1989 Listed on Helsinki Stock Exchange since billion in capital under management Funds and mandates managed/advised by Access Capital Partners approx. 2.5 billion* * CapMan owns 35% of affiliated company Access Capital Partners. 5

6 Five investment areas after Norum transaction CapMan Buyout CapMan Private Equity 1.5 billion CapMan Technology CapMan Life Science CapMan Russia CapMan Real Estate 1.6 billion 26 investment professionals 11 investment professionals 4 investment professionals 9 investment professionals 39 real estate professionals Manufacturing, retail and services Middle market equity investments million / company Both equity and mezzanine investments Expansion and later stage technology companies Equity investments 3 15 million / company Medical technology Equity investments 2 7 million / company Industrial and service companies Equity investments 5 15 million / company Commercial properties in Helsinki area, property development targets in Finland and hotel properties in Finland and Sweden Investments typically 5 50 million / real estate Latest funds: CapMan Buyout VIII 440 million (2005) CapMan Technology million (2007) CapMan Life Science IV 54 million (2005) CapMan Russia Fund 88 million (2007)* CapMan Hotels RE 835 million (2008)* * Fundraising continues. 6

7 Why is CapMan entering the Russian market? Attractive market opportunity with significant business potential Customer demand for Russian Private equity fund run by an established western player Leveraging CapMan s fund management and value creation expertise in a new market In line with CapMan s alternative asset growth strategy CapMan has previous experience from Russia through Alliance ScanEast Fund Norum is an excellent acquisition target for CapMan Established team with complementary experience to CapMan Good cultural fit through Western-Russian team Common view on how to develop operations further 7

8 Norum transaction structure and price First stage May 2008: CapMan Plc acquires 51% of Norum and 100% of the share capital of advisory company Norum Private Equity Advisors Limited Purchase price approx. 3.4 million based on future management fees and the possible carried interest income to be received from CapMan Russia Fund will be adjusted on the basis of the final fund size of CapMan Russia Fund Payment Approx. 1.0 million in cash Approx. 2.4 million in CapMan B shares through a directed issues to the sellers (982,539 B shares, 2.43/share) Possible additional share price to be paid in CapMan Plc B shares and cash A three-phase lock-up for the B shares issues in the directed share issue Second stage CapMan has the right to buy remaining 49% Norum shares at the end of the investment period of CapMan Russia Fund at the latest in July The sellers have the right to sell the remaining shares to CapMan at any time. Purchase price / share will be the same as the fund size adjusted final transaction price in the first stage. 8

9 Impact on CapMan Group figures Capital under management: The Group s capital under management will increase by 88 million to approx. 3.1 billion Management fees and expenses: the management fees will cover the teams operating expenses no impact expected on CapMan Plc s result in short term Carried interest: Potential carried interest to be received from the fund is dependent on the final fund size and will be communicated at the fund s final closing. No short term impacts Own fund investments: CapMan s own investment in CapMan Russia Fund is 13.5 million. Consolidation to Group figures: The acquired entity will be consolidated to Group s figures after the transaction is closed, on estimate as of 1 July 2008 Long-term impacts: The transaction provides long-term earnings potential in the form of management fees and potential carried interest for the current business and potential new businesses. 9

10 Contents Transaction CapMan Russia The Russian market 10

11 Norum - Russian private equity specialist One of the most experienced western-type private equity investors in Russia. Established in EBRD, Sitra (Finnish Innovation Fund) and DnB NOR had an important role in establishing the company. Established team and market position Main office in Moscow with strong regional networks Stable and international team of nine investment professionals Proven investment strategy Focus on selected industries: consumer goods and services, manufacturing, telecom, transportation, financial services and media Long track record Since 1995 Norum has managed two private equity funds and invested in 24 Russian companies of which 18 has been exited with good returns. Norum s transparent way of working and its active ownership of portfolio companies work well with CapMan s strategy and corporate culture. 11

12 Established regional networks Former/current CapMan Russia office Former/current CapMan Russia portfolio company Murmansk Medvezhegorsk Petrozavodsk Severodvinsk St.Petersburg Velikie Luki Novgorod Arkhangelsk Kaliningrad Tver Moscow Vologda Kaluga Nizhnij Novgorod Ekaterinburg Omsk Novosibirsk 12

13 Norum becomes CapMan Russia Norum Russia Fund III CapMan Russia Fund 13

14 CapMan Russia Fund Replaces Norum Russia Fund III established in July Current size 88 million incl. CapMan s 13.5 million commitment. Target size 150 million. Investment focus Small and mid sized Russian companies Significant minority / control investments Enterprise value typically 5-50 million Target company s net sales typically million Equity investment 5-15 million per transaction Ownership percentage typically at least 25% at entry Selected industries e.g. consumer goods & services, manufacturing, telecom, transportation, financial services and media Considerable potential for growth, committed management team and commitment to improve corporate governance & transparency 14

15 CapMan Russia investment team Senior Partners and Partners Hans Christian Dall Nygård Head of CapMan Russia Investment Operations, Partner MBA, M.Sc. (Econ.), CEFA Norwegian, 14 years in Russia Joined 1996 Alberto Morandi Partner M.Sc. (Econ.) Italian, 19 years in Russia Joined 1999 Petri Saavalainen Head of CapMan Russia, Senior Partner, M.Sc. (Eng.) Finnish Joined 1995 Other investment professionals Alexander Kaleniouk Investment Director MBA, M.Sc. (IT) Russian Joined 2007 Alexander Nikitin Investment Director M.Sc. (Eng.), M.Sc. (Econ.) Russian Joined 2007 Lilia Tioutrina Investment Manager M.Sc. (Eng.), M.Sc. (Econ.) Russian Joined 1998 Kåre Wessel Investment Director State Authorised Public Accountant Norwegian, 15 years in Russia Joined 1997 Alexander Vlasov Investment Director M.Sc. (Eng.), M.Sc. (Econ.), CFA Russian Joined 2000 Knut J. Borch Senior Advisor M.Sc. (Econ.) Norwegian Joined 1995 Most of the team working together since 1999 In addition five dedicated professionals for analysis, due diligence, monitoring and legal support 15

16 Contents Transaction CapMan Russia The Russian market 16

17 Attractive market opportunity One of the fastest growing emerging markets A population of 141 million across the region Expanding consumer market with a strong and growing demand for goods and services Increasing number of attractive acquisition targets Growing number of skilled entrepreneurs and managers committed to Western principles of business ethics Growing supply of deal flow outside Moscow Limited competition for middle market deals 17 Source: Eurostat, CIA World Factbook

18 Russian private equity emerging Increasing interest in private equity Banking infrastructure underdeveloped and lending capacity still limited Public markets small and dominated by large oil companies resulting in limited access to capital In 2006 total funds under management in all private equity funds in Russia at 4.2 billion (increase of 26% from 2005) Some 1.0 billion raised to seven new funds in registered fund management companies operating in Russia 10 largest management companies accounting for 56% of the total market capitalization 65 new investments made in 2006 with aggregate equity investments approx. 440 million (increase of 164% from 2005) 18 Source: RVCA

19 Russian private equity market Total market capitalization of Western style private equity $6.3 billion in 2006 Russian private equity capital estimated to total some $40 billion Professional private equity fund managers Deal size focus* Large > M 15 Middle M 5-15 Delta Capital Partners Mint Capital Baring Vostok CapMan Russia Russia Partners Quadriga Capital Renaissance Alfa Capital Troika Capital Partners Partners AIG Renova UFG Private Equity Volga River New Russia Growth Gazprom Bank Alfa Group Millhouse Capital Several other players MDM Bank Moskvy Interros Several semi-oligarchs Small <M 5 Eagle Ventures Marshall Capital Europe & US Europe & US & Russia Russia Source of capital * By equity investment Source: CapMan analysis, RVCA 19

20 Contacts Heikki Westerlund CEO, Senior Partner, CapMan Plc tel Hans Christian Dall Nygård Managing Director of Norum, Head of CapMan Russia Investment Operations, Partner tel Petri Saavalainen Head of CapMan Russia, Senior Partner tel