Private European investment fund CapMan speaks with Private Banker International about its products and services, including its focus on ESG.
CapMan is a private asset expert from the Nordic region that approaches value creation effectively. It offers an extensive array of financial services and product.
The firm began with buyout tactics in the Nordics across sectors, focusing mostly on small and mid-cap companies. And it has evolved and therefore listed 2001.
Headquartered in Helsinki, the company currently employs 200 people throughout the Nordic region and is listed in Helsinki. Additionally, it now manages €5bn ($5.3bn) and is more focused on real assets.
Jonathan Aiach, director of development at CapMan further explains: ‘‘A big portion of the assets are in real estate strategies across the Nordics. And then we have an infrastructure strategy, which we launched in 2017. And we are now fundraising for a second fund, which is targeting small and mid-cap companies in the Nordics, again, with a strong emphasis on sustainability or trying to improve their sustainability profile through a number of things. That is one of the flagship strategies that we are currently raising for. And with this, we have had success across Europe, mostly between family offices. We have private banks invested with us, from Switzerland etc.
‘‘We also have a couple of smaller strategies such as growth, equity, and private debt. But these are quite small, and latest thing we acquired a couple of months ago, a Finnish company specialised in timber, so they have a portfolio of forests and in Europe. And they have mostly distributed their products in the Nordics now, and we’re integrating them right now.’’
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Following CapMan acquisition with Dasos Capital Oy, an asset management company focusing on sustainable timberland investment, the business intends to provide this to all clients because it is a popular motif in the Nordics.
Through investment strategies that include real estate, infrastructure, and private equity and are overseen by dedicated groups locally, CapMan has a substantial foothold in the unlisted market.
Client profile at CapMan
CapMan has an extensive network of families and foundations in the Nordics, particularly in Finland and Sweden.
For a long time, many families or institutions have been investing, and the third generation is now taking part according to Aiach. One of CapMan’s benefits is that its clientele has a strong knowledge of one another because they have often made their fortunes in the shipping, industrial, or other business sectors that are somewhat related to the assets that CapMan invests in.
‘‘We also have two major family offices from throughout Europe, one in Switzerland and one in Italy. One of our products, the growth equity fund, with a higher risk-return profile, is drawing ‘new money’ investors. Otherwise, I would say this is coming from established wealth clients, as well as institutional clients looking to diversify, who have previously invested with larger players, Pan European players, or global players, and now see an interest in going to someone who is a little more specialised and local. As a result, they recognise the distinctive elements of our investing methods,’’ Aiach adds.
CapMan net zero and ESG focus
By establishing ESG-linked targets, CapMan expedites leadership in environmental, social, and governance domains. As part of this endeavour, CapMan pledges to implement novel approaches to reduce greenhouse gas emissions in order to put itself, its portfolio firms, and its real estate on a road toward net-zero emissions through the Science Based Targets initiative (SBTi).
‘‘We have committed to align with a net zero objective by 2040. And that means that all the assets that we have in portfolio will be transitioned to being aligned with a low carbon economy.’’
Aiach elaborates on how CapMan’s transportation assets would be one of the primary targets of ESG efforts.
The company aims to reduce carbon emissions and electrify perhaps 90% of the fleet over a ten-year plan. It will need a significant amount of capital expenditures (CapEx) in this industry before the whole change can be executed.
Furthermore, CapMan plays a major role in bolstering supply chains that supply the resources required to build and maintain these assets as well as governance. Aiach describes how ‘‘funds are attempting to improve the professionalism of the firms in their portfolios.’’
CapMan thus aims to make sure that materials are imported in a more sustainable manner, ideally locally, while creating or managing the business.
‘‘Geographically speaking, it is a good laboratory, in the sense that you can see how things have been done in Norway or Sweden to achieve and employ efficient energy sources. Over the previous few years, Sweden has regularly provided some of the lowest-cost energy, such as electricity. It is a good example of how things could be done in the rest of Europe. But of course, it is not the same in all the north of Europe, but I think we can get good lessons from there,’’ as Aiach outlines how the Nordics are spearheading the future of ESG, with renewables being promoted for a long time.
Why do the Nordic nations appeal to so many investors?
‘‘The first and most obvious point is that it is a politically and economically stable region. So, the economy has relatively minimal volatility, and the government is steady. Despite the fact that taxes are high, the rules are quite stable.
‘‘The ease of doing business is fairly high in areas such as Sweden and Denmark. There is also a ‘vibrant technology scene’. And venture capital investments. It is reliable, there is little corruption, high level of education and productivity is quite high. There has also been a lot of aid with green funding.
‘‘It’s not only like taxation, tax incentives, but it’s also the government policy, facilitating, for example, green bonds, and ways to finance companies that are tied to ESG goals, which are quite interesting. And they are fairly diverse economically. They still have, they become like the rest of Europe, focused on services. But still, industry is quite a pretty important portion of it,’’ says Aiach.
CapMan 2024 horizon
Moreover, Aiach points out that, while there is a low focus on private equity, CapMan sees more demand on the real asset side. The company is currently rethinking its approach because it has been conducting mid-cap buyouts for a long period.
He explains: ‘‘We are thinking about taking a little more time to decide on the positioning of our private equity initiatives and whether or not we can continue in the buyout area. So, it is on pause. There is more focus on asset management right now. We are also using the chance to raise other products in real assets to reflect on this. However, it appears that we can increase the value of real assets.
‘‘CapMan also have a wealth manager at the firm. It is called cabin wealth services, we have a staff dedicated to managing funds for foundations and families in the Nordics, primarily in Finland. A little bit in Sweden, which is also quite interesting, and its open architecture is updating a variety of products.
‘‘We are continuing to fundraise and invest or second infrastructure fund. And then we are going to start fundraising for real estate value, the flagship offering. We are also looking at other strategies that will be developed internally or through acquisitions. Something with a little bit higher return strategy, but still building on our infrastructure expertise. But they will be short term projects really.’’
The investment management company is looking into numerous more collaborations with firms in Europe and the United Kingdom to grow its client base and product offerings, as well as actively seeking market prospects and coalitions.