Concerns over exits at Ilmarinen-owned manager leads to 'unsatisfactory' results
EUROPE - CapMan Oyj, the €3bn listed private equity fund manager part-owned by five pension funds, has blamed a challenging fundraising environment and concern over the timing of exits for "unsatisfactory" half-year results.
In a presentation to investors, chief financial officer Niko Haavisto pointed to a record number of private equity funds targeting "increasingly selective" investors - including insurers deterred from investing in private equity by The European Union's Solvency II directive.
Pension insurer Ilmarinen owns 9% of the Finnish firm - and controls 5% of shareholder votes. Other major shareholders include pension insurers Varma and Valtion Eläkerahasto, the Finnish state pension fund, as well as Swedish pension buffer fund AP7.
Chief executive Lennart Simonsen said full-year results would "mainly depend on whether funds already generating carried interest are able to conduct new exits, whether new funds will transfer to carry, and on how the value of investments develops in funds where CapMan is a substantial investor".
The firm, which invests in non-listed companies in the Nordics and Russia, said a "challenging" fundraising environment meant it would rely on as yet non-existent funds reaching sufficient size to cover operating expenses.
CapMan typically charges investors in its funds an annual management fee of between 0.5—2.5% based on realised exits during the investment period and thereafter the value of the invested portfolio.
Yet despite difficulties raising capital, Simonsen predicted CapMan would be able to complete first-round fundraising for its Buyout X, Nordic Real Estate, and Russia II funds, which have a combined target size of €700m, by the end of the year.
Moreover, across the market exit values increased 60% in the second quarter over the first. "A stronger exit market will boost capital repayments to investors and enhance their ability to make new commitments to private equity funds," said Simonsen.