Tesi made new investments totalling EUR149 million in 2017, including a EUR60 million commitment in the fund-of-fund KRR III. The firm’s direct portfolio companies also continued to grow strongly, sales increasing on average 22 per cent during the year.
Coupled with a favourable operating environment, strong growth in portfolio companies as well as numerous exit, this added up to a financial return of EUR66 million for the year.
CEO Jan Sasse says; “In 2017 the Finnish venture capital and private equity market developed well. New funds were raised in all development phases. The Finnish venture capital investor Inventure broke records as it raised a total of EUR110m in its third fund. KRR III, a fund-of-fund established by Tesi and Finnish pension and insurance companies raised EUR150m to be invested in Finnish venture capital and growth funds in the coming years.”
“In addition to KRR III, Tesi gave commitments to seven funds totalling EUR60 million, and made direct investments in 22 companies totalling EUR29m. Tesi’s international partners invested EUR72 million in Finnish companies. The continued high activity of Asian investors in the Finnish venture capital and private equity market was one of the prevailing trends. Furthermore, both Finnish and international industrial buyers were active in the market. “
“The persistent co-operation between investors and company management in developing portfolio companies was reflected in strong growth and numerous exits, both in funds as well as in direct investments. Tesi’s financial result was EUR66m. Tesi will reinvest the profits into new funds and companies to support the growth and internationalisation of Finnish companies.”
Venture capital and private equity markets have remained stable both in Finland and internationally, largely due to a continuing appetite for risk and abundant liquidity in almost all asset classes. Finnish venture capital and private equity funds were successful in fund-raising in 2017. New funds were raised to support the growth and risk-taking capacity of companies in all phases of development.
In 2017, Finnish venture capital investment volumes remained close to the record levels of 2016, at some EUR250m. International investors are more active in Finland’s venture capital and private equity market than ever before.
Chinese investors, in particular, made many significant investments and acquisitions in Finland during the year.
Finnish buyout funds have around EUR1b of raised capital seeking new investees. A large part of these funds’ investment capacity will be targeted at an important part of Finland’s business structure – the growth and internationalisation of medium-sized companies and their mergers and acquisitions.
In 2017, Tesi made new investments amounting to EUR149 million (EUR165 million), including a EUR60 million commitment in KRR III. Tesi gave commitments to seven funds totalling EUR60 million (EUR102 million). Four commitments were made in venture capital funds and three commitments in small buyout funds. Tesi made direct investments in 22 companies totalling EUR29 million (EUR63 million), including the investments of Start Fund I Ky that Tesi acquired. Tesi’s international partners invested EUR72m in Finnish companies.
In 2017, KRR II became fully invested and its portfolio now consists of 10 Finnish venture capital and growth funds. KRR III made its first commitment in a Finnish venture capital fund.
The favourable operating environment was reflected in Tesi’s portfolio as strong growth in portfolio companies and many exits, which led to a strong financial result both in investments as well as in financial securities. Net gains from venture capital and private equity investments were EUR69 million (EUR46m): funds EUR53 million (EUR28m) and direct investments EUR15 million (EUR18m). Net gains from funds were boosted by positive increase in valuations and by exits. The net gains from direct investments comprised exits from investments. The net gains from financial securities were EUR18 million (EUR17m). Operating profit was EUR80 million (EUR55m), and profit after taxes for the financial year was EUR66 million (EUR45m).
The balance sheet total in 2017 was EUR1,020 million (EUR943m) and the company’s equity EUR978 million (EUR912m). The balance sheet value of funds was EUR372 million (EUR336m) and direct investments EUR189 million (EUR189m).
Investments under management totalled EUR1.2 billion at the end of the year. In addition to Tesi’s own investments and commitments, this consists of the assets that Tesi manages via KRR I, II and III.
The Finnish government has capitalised Tesi from the start of its operations with altogether EUR655 million. The company’s cumulative profit, including the figure for 2017, amounted to EUR323 million.
In 2018, Tesi has given a commitment to a Finnish growth fund Saari I Ky and made direct investments in Viria and Zervant.
Tesi’s strategic themes for 2018 are developing the Finnish venture capital and private equity market, active ownership, corporate responsibility and sustainable development and renewal.
Tesi’s focus on fund investments is increasingly on venture capital funds and small buyout funds. In 2018, Tesi will put emphasis on expanding the investor base of Finnish funds. A number of new teams are in the process of fund-raising in Finland. Tesi will continue to make direct minority investments in growth-seeking SMEs and industrial investments. The focus in direct investments is on the Industrial Renewal and International Investors investment programmes. New focus areas for direct investment are the circular economy and artificial intelligence.
Tesi will continue its close collaboration with EIF and EIB in channeling EU funding into Finnish funds and growth companies.
Excellent returns from previous financial years give Tesi strong resources for long-term investment operations that promote the growth of Finnish companies.
