CapMans growth continues Joakim Frimodig, CEO Helsinki, 1 November - - PowerPoint PPT Presentation

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CapMans growth continues Joakim Frimodig, CEO Helsinki, 1 November - - PowerPoint PPT Presentation

CapMan Plc 19/2018 result CapMans growth continues Joakim Frimodig, CEO Helsinki, 1 November 2018 Statements regarding future development and disclaimer statements. Forward-looking statements are based on the Company's current The


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SLIDE 1

CapMan Plc 1–9/2018 result

CapMan’s growth continues

Joakim Frimodig, CEO Helsinki, 1 November 2018

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SLIDE 2

Statements regarding future development and disclaimer

The following concerns this document, the related oral presentation by either CapMan Plc (hereinafter the "Company") or a representative of the Company as well as the subsequent Q&A sessions. This document published by the Company constitutes the written material of the presentation for potential investors regarding the possible offering of the Company's securities ("Securities"). The material set forth herein is not, and should not be construed as an offer to sell or a solicitation of an offer to subscribe

  • r purchase any Securities, or a part of such offer. Nothing in this material shall

form the basis of any contract and nothing in this should be relied upon in connection with any contract or commitment, and nothing in this constitutes a recommendation regarding the Securities. The decision to purchase Securities should be made only on the basis of the offer document (or similar document) that has been prepared in connection with the offering of the Securities. The offer document (or similar document) contains more detailed information concerning the Company and the Securities than set forth in this material, and potential investors should re-view the offer document (or similar document) to conduct an independent research and evaluation of the Company's business, financial standing and nature of the Securities before making an investment decision regarding the Securities. Certain statements presented that are not historical facts, including, among

  • thers, estimates of the overall economic development and the market situation,

expectations concerning the growth and profitability of the combined group, the realisation of synergy benefits and cost savings, as well as statements that contain the expressions "expects”, “estimates”, “forecasts”, “aims”, “believes”, “pursues”, “intends”, “could”, “anticipates” “plans”, “seeks”, “will”, “may”, “likely”, and “would” and other corresponding expressions or their negative variations identify forward-looking

1 Nov 2018 CapMan Plc 1-9/2018 result 2

  • statements. Forward-looking statements are based on the Company's current

expectations, estimates, decisions and plans as well as on the currently available facts regarding, among others, the Company's financial standing, results of

  • perations, plans, objectives, future results and operations. Such statements

involve inherent risks and uncertainties that, if materialized, may cause the actual results of operations of the combined group to be materially different than currently expected. These factors include the overall economic conditions, including currency and interest rate fluctuations impacting the operating environment and profitability of clients and thereby the orders and margins on them received by the combined group; competition; the combined group's business conditions and continuous development and improvement thereof; and the success of possible future acquisitions. Forward-looking statements are further based

  • n

numerous assumptions concerning the Company's current and future strategy and the Company's future business environment. No liability is accepted and no explicit or implicit guarantee or warranty is given with regard to this material, and no undue reliance should be placed on the truthfulness, accuracy or completeness of the material or the opinions expressed

  • herein. Portions of this material are in draft form. The information contained in

this material has not been independently verified nor will it be updated. The information contained in this material, including forward-looking statements, applies only on the date of this material and is not intended to be a guarantee of the future results. Any unsourced market data used in the material is an estimate made by the Company and has not been independently verified. The Company does not undertake to update any forward-looking statements except in circumstances specified by law and explicitly waives any liability for the material.

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SLIDE 3

3

We are building a modern and growth-oriented

”New doers” ”New direction” ”New attitude”

Renewed management and strengthened investment teams Clarified vision and new strategic direction New ways of working and company culture

1 Nov 2018 CapMan Plc 1-9/2018 result

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SLIDE 4

4

Value Builder

Building sustainable value for the enrichment of society Our objective is to offer attractive returns and innovative solutions to investors

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SLIDE 5

CapMan today

5

AUM EUR 2.8 bn 110 portfolio companies and real estate assets >120 LPs as customers Investment capital >MEUR 200

1 Nov 2018 CapMan Plc 1-9/2018 result

Sijoitustoiminta

  • masta taseesta

Management Company business Service business Investments from our

  • wn balance sheet
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SLIDE 6

Agenda

  • Strategy and financial objectives
  • Growth initiatives and value creation
  • 1-9/2018 result
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SLIDE 7

CapMan’s strategic direction

7

PRIVATE EQUITY & CREDIT REAL ESTATE INFRA

Buyout funds

CAPS SCALA

OPEN-ENDED FUNDS CLOSED FUNDS MANDATES, CLUBS, OTHERS INTERNATIONAL INVESTORS NORDIC INVESTORS LOCAL INVESTORS

SERVICES

Own balance sheet Broad access to capital Flexible products Active value creation

Growth fund Russia funds Value added (NRE funds) Yield (NPI & Hotel funds) Mandates (BVK) Infra fund Infra Mandates Credit funds

1 Nov 2018 CapMan Plc 1-9/2018 result

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SLIDE 8

Active approach to value-creation Increasingly flexible and diverse investment products Expanding investor base

We are building CapMan into a leading Nordic private asset manager

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SLIDE 9

Alternative investments interest:

Institutional investor plans for the coming 12 months

9

Source: Preqin Investor Update Alternative Assets H2 2018

Private Equity Hedge Funds Real Estate Infrastructure Private Debt Natural Resources

29% 16% 30% 43% 31% 30% 14% 19% 17% 8% 14% 13%

Invest LESS capital than in the past 12 months Invest MORE capital than in the past 12 months

1 Nov 2018 CapMan Plc 1-9/2018 result

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SLIDE 10

Agenda

  • Strategy and financial objectives
  • Growth initiatives and value creation
  • 1-9/2018 result
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SLIDE 11

11

Management Company business Investment business

Fund investments Real Estate Buyout Credit Procurement Fund advisory services Russia

Services business

Infra Growth

Fees

Fees

(incl. management fees and performance fees) Carried interest income Realised returns and changes in fair value

CapMan’s earnings model

Market portfolio

1 Nov 2018 CapMan Plc 1-9/2018 result

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SLIDE 12

The strategic direction impacts the earnings model:

More stability and predictability

12

Time Time Time

Fees Balance sheet return Carry

CapMan historically CapMan today CapMan in the future – long- term objective

Fees Carry Balance sheet return

ROE 20% (Objective for average ROE)

Carry Carry Illustrative, guidance for 2018 is provided on slide 32

1 Nov 2018 CapMan Plc 1-9/2018 result

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SLIDE 13

Short-term profitability Long term value upside

13

Current business portfolio complemented with new products

Higher fee income, more stability, reduced market risk

Scala Buyout NRE Growth

Caps

Nest Infra fund High Moderate Low High BVK NPI

Infra managed accounts

…to be complemented with new products and services CapMan’s long-term focus areas…

New Private Equity products

Traditional Launched in 2017-2018

1 Nov 2018 CapMan Plc 1-9/2018 result

New Infra products New Real Estate products New services

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SLIDE 14

Growth strategy progress

14

Significant investments in to growth:

  • CMNRE II fund establishment
  • CMNPI fund establishment
  • BVK mandate increase
  • Growth Equity fund establishment
  • Infra business area establishment
  • Service business strong growth

2017 2018 

The effect of year 2017 growth investments Additional investments:

  • Infra fund first close, fundraising

continues

  • Preparations for next Buyout fund
  • Mandates
  • Strong growth of Service business
  • New products and services
  • Strengthening distribution channels

Target

>10%

annual growth

Real Estate

1 Nov 2018 CapMan Plc 1-9/2018 result

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SLIDE 15

CapMan establishes infrastructure fund

1 Nov 2018 15 CapMan Plc 1-9/2018 result

10/2018 2019 CapMan Infra Managing Partner Ville Poukka nominated to the Management Group as of 1 November 2018

The fund invests especially in core/core+ infrastructure in the energy, transportation and telecommunications sectors CapMan’s commitment to the fund is MEUR 30 million

MEUR 115

>MEUR 300

CapMan Nordic Infrastructure I

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SLIDE 16

Growth efforts continue

Key near term growth projects

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  • Strengthening CapMan’s

distribution channels organically

  • Potential distribution

partnerships

  • First close, fundraising

proceeding well

  • Target size of the fund is above

MEUR 300 (2019)

  • Continuing the strong growth of

current services

  • Developing new services
  • Launching fundraising in 2018
  • Launching new investment

products

  • Renewal of current products
  • New, tailor-made mandates for

limited investor groups

  • MEUR 500 BVK mandate and

MEUR 70 investment in Elenia are examples

Strengthening the distribution New products Fundraising of Infra fund Growth of Service business Mandates New Buyout fund

1 Nov 2018 CapMan Plc 1-9/2018 result

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SLIDE 17

Agenda

  • Strategy and financial objectives
  • Growth initiatives and value creation
  • 1-9/2018 result
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SLIDE 18

Highlights for 1-9/2018

18

Fee growth from the comparable period

24%

Fee profitability

MEUR 5

EPS

7.5 cents

Very successful exit from

Fluido 15

exits in total

1 Nov 2018 CapMan Plc 1-9/2018 result

MEUR 115

raised for the Infra fund

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SLIDE 19

Turnover and operating profit

1 Nov 2018 CapMan Plc 1-9/2018 result 19

7.5 16.6 26.0 34.8 8.5 19.9 27.1 10 20 30 40 1-3 1-6 1-9 1-12 2017 2018 10.5 17.8 22.9 19.5 4.1 10.1 14.9 5 10 15 20 25 1-3 1-6 1-9 1-12 2017 2018

Turnover Operating profit

MEUR MEUR

Idean Q1 2017: €9.4 million

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SLIDE 20

Fee development and development of fee based profitability

1 Nov 2018 CapMan Plc 1-9/2018 result 20

Fees include management fees and service fees on group level. Operating profit includes Management Company and Service Business without carried interest.

24 25 26 27 28 29 30 31 32 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018

Fees (excluding carry), LTM

1-9 2018 +24% YoY 1 2 3 4 5 6 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018

Comparable operating profit (excluding carry), LTM

+MEUR 5 1-9 2018

MEUR MEUR

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SLIDE 21

19.4 3.1 3.5 23.9 0.9 2.3 5 10 15 20 25 Palkkiot Voitonjako-osuustuotot Sijoitustoiminta MEUR

Turnover development by segment

21

+24%

1 Nov 2018 CapMan Plc 1-9/2018 result

Dividend and interest income from financial assets held for trading

1-9/2017 1-9/2018 1-9/2017 1-9/2018 1-9/2017 1-9/2018

Management Company business + Service business + Investment business + Others and eliminations

= MEUR 27.1

Fees Carried interest Investment business

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SLIDE 22

2.6 3.1 5.0 0.9 10.4 2 4 6 8 10 12 Palkkiot Voitonjako-osuustuotot Sijoitustoiminta MEUR

Operating profit development by segment

22

Excluding items affecting comparability* Liikevoitto sisältää konsernifunktioiden kulut.

1 Nov 2018 CapMan Plc 1-9/2018 result

19.4 Idean 9.4 1-9/2017 1-9/2018 1-9/2017 1-9/2018 1-9/2017 1-9/2018

= MEUR 14.9*

Management Company business + Service business + Investment business + Others and eliminations

Fees Carried interest Investment business

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SLIDE 23

Management Company business:

Management fees grew from the comparable period

23

Private Equity Real Estate Infra & Credit

  • Buyout
  • Growth
  • Russia
  • Others
  • NRE funds
  • NPI fund
  • Hotel fund
  • BVK mandate
  • Others
  • Mezzanine funds

(Nest Capital)

  • Infra mandate
  • Infra fund

AUM: MEUR 800 AUM: MEUR 1 700 AUM: MEUR 300

New capital raised during the last 18 months

Fund AUM, MEUR Established CM NRE II 425 9/17 CM NPI 55 10/17 Growth Equity 86 12/17 Investment in Elenia 70 6/18 Infra fund 115 raised (300 target) 10/18 Total AUM: MEUR 2 800

MEUR 1.4

Fee-based operating income was MEUR 1.4, which increased due to growth in fees Exit from InfoCare and Access Capital fund contributed to MEUR 0.9 in carried interest income.

MEUR 0.9 15%

Management fees grew 15% from the comparable period and were MEUR 16.5.

1 Nov 2018

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SLIDE 24

Service business:

Turnover +64% and strong profitability

1 Nov 2018 CapMan Plc 1-9/2018 result 24

MEUR 6.6

Turnover from Service business was MEUR 6.6. Turnover growth was fuelled by strong growth in net sales

  • f CaPS and success fees of Scala Fund Advisory.

8

Events 1-9/2018:

CaPS

Contract volumes of CaPS reached MEUR 130, 23% growth compared to the corresponding period last year.

64%

The operating profit of the segment grew more than 150% compared to the corresponding period last year to MEUR 3.6.

150%

CaPS

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SLIDE 25

Investment business:

Continued strong activity during the review period

1 Nov 2018 CapMan Plc 1-9/2018 result 25

1,8

  • milj. €

The operating profit of the investment business was MEUR 10.4 during the review period. Successful exits from Fluido and Walki contributed significantly. The funds from our trading portfolio will be further allocated to new products in 2018 and 2019, of which the MEUR 30 commitment to the Infrastructure fund is an example.

2018- 2019

We reduced the size of our trading portfolio as planned by approx. MEUR 20. The assets were allocated mainly to our own new funds.

MEUR 20

Events 1-9/2018:

MEUR 10.4

New exits and investments during the review period:

Buyout Real Estate

CapMan Buyout has completed already six exits during the review period. More exits are expected in the coming months. CapMan Real Estate completed eight new investments and nine exits in the Nordic countries. The lease maturity of the Hotel fund has been extended to over 19 years.

Growth Equity

CapMan Growth fund successfully exited Fluido and invested in two fast growing Finnish companies during the review period.

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SLIDE 26

Strong investment activity during the review period

26

Exits New investments

(Infra) (Growth Equity) (Growth Equity) (Buyout) (Buyout) (Buyout) (Buyout) (Buyout) 8 deals across the Nordics 9 deals across Finland (Russia) (Buyout)

1 Nov 2018 CapMan Plc 1-9/2018 result

(Growth Equity)

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SLIDE 27

The role of CapMan’s balance sheet

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Support growth and operations Ensure stable dividend development Support in achieving targeted returns

1 Nov 2018 CapMan Plc 1-9/2018 result

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SLIDE 28

CapMan’s own investments 30 September 2018

89 100 Pääomasijoitukset Kassa ja markkinasijoitukset

28

Private Assets in total 47% Target allocation 80% By the end of 2019. The trading portfolio was reduced by MEUR 20 as planned during the review period. Funds from the trading portfolio were mainly allocated to new, own funds. Capman has made a MEUR 30 commitment to the Infra fund after the end of the review period.

MEUR MEUR

1 Nov 2018 CapMan Plc 1-9/2018 result

Private Assets Cash and market investments

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SLIDE 29

CapMan’s business and stock market development

1 Nov 2018 29 CapMan Plc 1-9/2018 result

Management fees + service fees Carried interest Fund investments Trading portfolio

The stock market’s role in CapMan’s result formation The impact

  • f market

volatility Strategic impact Fee leveles are pre-defined, no direct impact from the market Timing of exits and valuation Fair value development, timing of exits and valuation Changes in market value / marked to market

  • Liquidity

management

  • Increased private

asset / fund allocation

  • Effective hedging
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SLIDE 30

Financial objectives

30

Growth of the Management Company and Service business

>10%

Average annual growth

  • bjective

Equity ratio

>60%

Dividend distribution

  • bjective

The company’s objective is to pay an annually increasing dividend to its shareholders.

Return on equity

>20%

Dividend per share has grown every year since 2012

Achieved 1-9/2018: 24%* Achieved 1-9/2018: 12% Achieved 9/2018: 58%

*Fees include management fees and service fees on group level and exclude carried interest income and items affecting comparability. Financial objectives are not including items affecting comparability.

1 Nov 2018 CapMan Plc 1-9/2018 result

On average

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SLIDE 31

CapMan wants to be an even better dividend payer

31

4 6 7 9 11

  • 2

2 4 6 8 10 12 14 2012 2013 2014 2015 2016 2017

Vertailukelpoinen osakekohtainen tulos, senttiä Osinko/osake, senttiä

Updated dividend policy: CapMan’s objective is to pay an annually increasing dividend to its shareholders Ability to pay an increasing dividend:

  • Strong result profile and

cash flow

  • Significant liquid and

distributable assets

  • Strong balance sheet with

equity ratio of approx. 60%

1 Nov 2018 CapMan Plc 1-9/2018 result

Comparable earnings per share, cents Dividend per share, cents

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SLIDE 32

CapMan’s objective is to pay an annually increasing dividend to its shareholders. The combined growth objective for Management Company and Service business is more than 10 per cent p.a.

  • n average. The objective for return on equity is more than 20 per cent p.a. on average. CapMan’s equity ratio

target is more than 60 per cent. CapMan expects to achieve these financial objectives gradually and key figures are expected to show fluctuation

  • n annual basis considering the nature of the business. CapMan expects fees from services to continue to grow

and have an impact on results from the Management Company and Service business in 2018. Our objective is to improve the profitability of Management Company and Service business before carried interest income and any possible items affecting comparability. The return on CapMan’s investments have a substantial impact on CapMan’s overall result. The development of industries and local economies, inflation development, valuation multiples of peer companies, exchange rates and various other factors outside of CapMan’s control influence fair value development of CapMan’s overall investments in addition to company and real estate specific development. CapMan’s objective is to improve results longer term, taking into account annual fluctuations affecting the

  • business. For these and other above-mentioned reasons, CapMan does not provide numeric estimates for 2018.

Outlook estimate for 2018

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SLIDE 33

Largest shareholders 30 September 2018

Shareholder

Shares and votes (#)

Share of shares and votes (%)

1 Ilmarinen Mutual Pension Insurance Company 10,737,228 7.31 2 Mandatum Life Insurance Company Limited 10,464,415 7.12 3 OY Inventiainvest AB 7,024,794 4.78 4 Laakkonen Mikko Kalervo 6,378,320 4.34 5 Varma Mutual Pension Insurance Company 3,675,215 2.50 6 Joensuun Kauppa Ja Kone Oy 3,261,853 2.22 7 Vesasco Oy 3,088,469 2.10 8 The State Pension Fund 2,500,000 1.70 9 Heiwes Oy 2,094,480 1.43 10 Winsome Oy 2,076,299 1.41 10 suurinta yhteensä 51,301,073 34.9% Johtoryhmä 1,049,066 0.7%

33

>18 000

shareholders During the review period, Management Group of CapMan have increased their holdings to

  • ver 1 million

shares.

1 Nov 2018 CapMan Plc 1-9/2018 result

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SLIDE 34

IR calendar and IR team

34

IR calendar 2018 IR team

Joakim Frimodig, CEO

  • tel. +358 50 529 0665

joakim.frimodig@capman.com Niko Haavisto, CFO

  • tel. +358 207 207 583

niko.haavisto@capman.com Linda Tierala, Manager, Communications & IR

  • tel. +358 40 571 7895

linda.tierala@capman.com

  • Capital Markets Day 2018

28 Nov 2018 Savoy, Eteläesplanadi 14, Helsinki

1 Nov 2018 CapMan Plc 1-9/2018 result