Finnish pension funds Ilmarinen, Keva, Elo and the State Pension Fund have committed a total of €70m to a new fund of funds investing in venture capital and small buyout funds in Finland.
FoF Growth II, launched by Finnish Industry Investment (FII), has completed a successful first closing, raising €130m in commitments.
FII is a government-owned investment company that promotes Finnish business, employment and economic growth through venture capital and private equity investments.
The new fund will focus on Finnish venture capital and small buyout funds, especially in technology.
Throughout its investment period from 2014 to 2018, it will invest in around 100 companies via 10 funds.
It is estimated that the total size of the portfolio funds will reach €1bn.
The fund’s planned lifespan is 15 years.
FoF Growth II’s portfolio will be similar to that of its predecessor, FoF Growth I, launched in 2008.
Since inception, FoF Growth I has invested in 11 Finnish venture capital and small buyout funds, holding stakes in more than 50 companies and 20 projects with a total turnover of €490m.
There is no specific limit for how much of FoF Growth II’s portfolio can be invested in individual funds, but investments will typically range between €5m and €15m.
The fund will be run in-house, with fund managers selected primarily by FII’s dedicated fund management team, which has a long track record in fund investments.
In addition to FoF Growth I and II, FII also makes fund investments in venture capital and private equity funds separately from its own balance sheet, as well as venture capital or private equity investments in companies together with private co-investors.
Jan Vapaavuori, Finland’s minister for economic affairs, said: “The majority of new jobs in Finland are created in rapidly growing small and medium-sized enterprises.
“But the main obstacle for growth that these companies face is funding. The new fund ensures there is capital available for growth companies.”
Jouni Hakala, director at FII, said: “The fund’s successful first closing is a good demonstration of our long-term co-operation with the major Finnish investors.
“All four major investors are significant global investors and experienced in venture capital and private equity.
“The fund will offer them the chance to increase the financial value of their stake by promoting the growth of investee companies.”
The fund’s target subscription is €100m-150m, and it is open to further investment until June.