The most promising companies create the best impact on the economy
Profitability plays an important role in terms of economic impact. Setting a target for return on investment guides capital into those investments that will have the most sizeable impact on the macroeconomy: the most promising companies grow faster and create more new jobs. Profitability also ensures operational continuity of investment activities and strengthens risk-taking capacity.
In order to create economic impact, the investor must be able to target its funds to the most promising companies. Therefore high quality deal-flow is a prerequisite for successful investments.
FII analyses approximately 200 projects on an annual basis. Of these 15% are funds and the rest are direct investment projects. On average approximately 10% will succeed to the investment phase. The year 2013 was very active especially in terms of direct growth company deal-flow.
FII's financial performance is cyclical by nature and is heavily dependent on the economy as a whole. In a challenging economic climate FII produced a loss of € -7.6 million in 2013. The law that guides FII's activities states that in order to achieve its economic policy objectives, FII can accept a higher risk level than usual. The company's strategic planning focuses on balancing operations so that impact objectives and returns on investment are achieved at the same time.
Despite the financial losses and write-downs in recent years, the Finnish Government's investments of €470 million into FII have grown into €560 million in equity. Since 1995, the company's profits have achieved the level of inflation. FII attempts to balance out the changes in investment volumes in the market by investing actively also during economic downturns.
FII's annual cost figures are approximately 1 % of assets under management. Considering its role as an investor both in funds and in companies, FII is a cost-effective investor. According to an external evaluation of FII's operations which was carried out at the end of 2013, FII is also cost-effective in comparison to other Nordic public financiers. However, as FII is an evergreen investor its costs cannot be directly compared to those of private risk capital funds.