Through fund investments, Finnish Industry Investment (FII) promotes the establishment of venture capital and private equity funds operating in Finland. In order to develop expertise in venture capital and private equity, we pay special attention to the operational quality of the management teams and to their ability to develop the business operations of their portfolio companies. In 2012, our fund investments focused on two new venture capital funds and two new mid-market buyout funds.
We make direct investments in focus sectors in accordance with set goals. Special attention has been given to the cleantech sector, the mining industry, the service sector and the stabilisation investment programme. In 2013 we will also see bioeconomy and maritime cluster companies in the deal flow.
State's additional investments secure investment volume
At the end of 2012, FII's total investments and commitments totalled 720 million euros. With the current investment policy, in recent years the markets have offered about 100 million euros per year of new, acceptable investment opportunities. The amount of capital returned from the markets has been significantly smaller than anticipated. With the capitalisation of 50 million euros in 2012, we were able to keep up the planned investment volume level.
Return on investment at the target level
The Group's profit for the year was €7.3m. Profits, both from investments and from liquid securities, improved compared to the previous year.
FII's annual result fluctuates strongly with economic trends. During the previous four years, a total of 120 million euros in venture capital write-downs were made in funds and in direct investments. At the same time, exits from investments have been slower than estimated. Renewal was visible in the venture capital markets in 2012 and buoyed investor confidence. The return on investment from buyouts is at the expected level.
The State has set the company's profit target so that the real value of the capital invested in FII must grow. Investments must be market-driven, and credible potential for success must exist for each approved business plan and investment. Profit must be pursued.
In total, Finnish State's investments of €470m in FII have grown into equity of 575 million euros. During the company's entire operating period, the return on invested capital has achieved the general level of inflation.
Promoting growth entrepreneurship
Ministry of Employment and the Economy's key target is the promotion of growth entrepreneurship. Through venture capital investments, we aim to increase the number of companies that pursue international growth. We are an active participant in financing projects in sectors undergoing structural change. We are participating in the implementation of the mineral strategy, and we aim to increase Finnish ownership in the mining sector. FII has been part of the development and implementation of the Ministry's Growth Track programme and in the operative implementation of the Vigo programme. At the same time, we are exploring the best funds and companies spinning off from the programme for future investment opportunities.
The results of a corporate image survey indicate that FII's activities are based on the outstanding professional skills and credibility of the personnel. This year, we will pay special attention to analysing and communicating the impact of our investment activity.
President and CEO