Annual Report 2013

Catalyzing risk capital

Nine-fold leverage on risk capital

Finnish Industry Investment Ltd (FII) investments are always made together with private investors. FII's share of ownership and financing round is limited to 50%. Therefore FII's investments have a catalytic effect on other risk capital. 

In 2011-2013, FII's investments generated on average a nine-fold leverage on other capital.

The leverage effect of FII's investments in the Finnish market (2011-2013)
Allocation FII's investment, €m (A) Fund size/financing round €m Leverage = B/A* International capital €m
Fund investments 71 998 14,0x 208
Direct investments 106 532 5,0x 126
Total 178 1530 8,6x 334
* In the calculations for direct investments' leverage, only instruments to which FII has participated in have been taken into account (equity and junior loans).

Investments in risk capital funds

FoF Growth I, a fund-of-funds established by FII and Finnish pension funds, is a good example of public private partnership and the catalytic effect of investment. The fund's total capital is €135 million. FII made a commitment of €54 million in the fund. The total capital of FoF Growth's portfolio funds was €805 million at the end of 2013, i.e. 15 times the amount in relation to FII's investment of €54 million. Of the previously mentioned €805 million, €225 million have been raised from international investors. 

During its investment period 2009-2013, FoF Growth invested in altogether 11 venture capital and small buyout funds.

The leverage effect of FII and FoF Growth investments on the total capital of FoF Growth portfolio funds

In 2008-2013, FII and FoF Growth made fund commitments totalling €285 million in Finnish risk capital funds, which in turn have raised €1.7 billion in total capital.       

In 2014, FII launched FoF Growth II with commitments from four Finnish pension funds. The total capital of FoF Growth is €130 million, of which FII's share is €60 million.

Direct investments

In 2011-2013, FII made venture capital and buyout investments totalling €106 million. With FII's participation, the total capital which these companies raised was approximately five times in relation to FII's investment.   

 

In the calculations for direct investments' leverage, only instruments that FII has participated in have been taken into account (equity and junior loans).

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