Annual Report 2012

Economic and societal impact

A successful, growing and internationalising company is the best example of the impact of venture capital investing.

Catalysing and developing the Finnish risk capital market

Through fund investments, Finnish Industry Investment promotes the establishment of new venture capital and private equity funds in Finland. FII's portfolio of Finnish risk capital funds is one of the most extensive in the country.

FII and FoF Growth have had a fundamental role in Finland in ensuring the establishment of funds that are managed by professional teams and that have reached the critical minimum size at first closing. Anchor investors are important also in terms of later fund-raising because some investors wait until after the first closing to join in. In order to develop expertise in venture capital and private equity, FII pays special attention to the operational quality of the management teams and to their ability to develop the business operations of their portfolio companies. 

The fund investments of Finnish Industry Investment and FoF Growth have a significant leverage effect. In 2008–2012, Finnish Industry Investment made commitments of 115 million euros to Finnish growth and venture capital funds, and FoF Growth 110 million euros. These funds raised 680 million euros of other capital. Among the investors is e.g. European Investment Fund, which has invested 110 million euros into Finnish funds during this period. 

 

The growth and venture capital funds, in which FII and FoF Growth have invested since 2008

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Developing economic structures by investing in new growth

FII focuses on companies that have the best potential for value creation through growth and internationalisation. FII also assesses the project's significance to the Finnish economy, technical expertise and job creation.

FII's key principle is to work hand-in-hand with private investors from Finland and abroad, to share risks while boosting the availability of funding, investment expertise and networks. FII always invests together with and on the same terms as private investors. FII taking part in an investor syndicate is often crucially important for the materialisation of the investment. Co-investors are typically venture capital and private equity funds and institutional investors.

FII operates in all economic siutations enabling new investments in order to create new jobs and tax revenue. There will be increasing demand for equity financing in the tightened financing environment.

In 2012, FII made commitments in four funds amounting to €32.5m and direct investments in 17 companies amounting to €22.3m.  In total, FII's investments and commitments amount to €720 million euros. FII is an investor, directly or through funds, in 510 companies. The portfolio companies employ 40 000 people in total and generate an annual turnover of €7.5b.

Attracting international capital and expertise to Finland

FII attracts international capital to Finland by investing in international venture capital and private equity funds and by co-investing together with international investors in Finnish companies.

In addition to growth capital, international investors provide companies with contact networks, which is important for an internationalising company. For international investors, FII is a local partner in Finland.  

The annual Enterprise Finland Venture Forum, organised by FII, Tekes and Finnvera, brings together the most promising Finnish growth companies with international investors.  

FII is part of the Team Finland network, which enhances Finland's external economic relations, the internationalisation of Finnish businesses, the country's brand, and inward investments. FII's role is closely linked to the promotion of investments into Finland.  

In 2012, FII invested in the Swedish Creandum's new venture capital fund and made direct investments to SkySQL and MetGen together with foreign co-investors.

Investment programmes for focus areas 

FII pays special attention to areas, which have growth potential but not enough private capital available. These are for example the cleantech and bioeconomy sectors as well the cluster companies of the maritime sector. In addition to these, FII's investment programmes strengthen chosen business areas according to the prevailing market situation.    

Investment programme for the mining cluster  

The investment programme for the mining cluster strengthens the domestic ownership of mining companies as well as increases the supply of financing. FII's goal is to promote investments and internationalisation of the entire mining sector. 

FII invests in the Finnish and foreign mining companies' projects that are located in Finland. Mining companies bring jobs and expertise to different regions of the country, and revitalise local economies. This has a significant effect on regional employment, particularly during the construction and production phases.

FII invests in mining companies by acquiring shares through share issues, in which case the capital is directly earmarked for the development of the company's projects in Finland. Financing a feasibility study is a high-risk investment; but without it, there is no mine.

FII has invested altogether approximately 40 million euros in eight mining companies operating in Finland, three of which it has since divested. FII's mining investments have had a catalytic effect on the investment activity in the mining sector in Finland. The Finnish investor base has strengthened and sector awareness among Finnish investors has increased.

In 2012 FII invested in Keliber Oy which is developing a lithium mining project in Western Finland. The financing is used for resource base exploration and a preliminary feasibility study. Altona Mining, on the other hand, opened an ore mine in Eastern Finland after several years of development work. The company employs 135 people in Finland. FII has been an investor in Altona Mining since 2006.

Stabilisation investment programme

In spring 2009, Finnish Industry Investment launched a 100-million-euro investment programme for stabilisation. The goal of the programme has been to secure the operations of viable companies that have run into temporary difficulties due to the general economic situation. The stabilisation investment programme was concluded at the end of 2012.

After reviewing about a hundred candidates, FII invested in 15 projects within the programme. FII's investments have catalysed an average of four times the amount of private capital in stabilisation projects.

FII has succeeded in helping portfolio companies overcome the financial crisis and investment slump. On average, sales and profitability of the companies included in the programme have improved.

Now that the programme has ended, FII will continue to manage the portfolio, and is also prepared for follow-on investments in portfolio companies.

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