CapMan Plc Stock Exchange Release 26 May 2008 at 8.00 a.m.
CapMan Plc has signed an agreement to acquire management companies of
Norum Russia Fund III ("Norum") from the company's senior management,
DnB NOR Bank ASA and Sitra Management Ltd ("the Sellers"). The
transaction is subject to receiving necessary regulatory approvals,
and it is expected to be closed by the end of June. In the first
phase of the transaction 51% of Norum Russia Fund III's management
company's and 100% of the advisory company's share capital and voting
rights will be transferred to CapMan Plc's ownership against the
payment of purchase price of approx. EUR 3.4 million. The said
purchase price will be adjusted on the basis of the final size of
Norum Russia Fund III, which is currently in fundraising phase.
CapMan Plc will finance the acquisition with cash and a directed
share issue to the Sellers. Expanding operations into Russia is a
significant strategic step for CapMan. CapMan's own investment to
Norum Russia III Fund is EUR 13.5 million.
The Norum team has been present in the Russian private equity market
since 1995 and is one of the most experienced teams in that market.
Norum has offices in Moscow and St Petersburg and strong networks in
the Russian regions. As a part of the transaction Norum Russia Fund
III established in July 2007 will transfer under the management of
CapMan. The size of Norum Russia Fund III is currently EUR 88 million
including CapMan's own investment of EUR 13.5 million. The fund's
fundraising will continue under the name CapMan Russia Fund.
CapMan will establish a new investment area CapMan Russia
Norum's 13 private equity professionals will transfer to the
employment of CapMan at closing. The team's investment professionals
have a strong track record with investments in 24 Russian companies.
Of these companies 18 have already been exited with good returns to
investors. The team will in future form CapMan Russia team. Mr Hans
Christian Dall Nygård, the current Managing Director of Norum, has
been appointed as the Head of CapMan Russia Investment Operations
responsible for all investment activity and management of the CapMan
Russia team. He will report to Senior Partner Petri Saavalainen, who
will assume the responsibility of integrating and developing the
Russian business area within the CapMan Group as Head of CapMan
Russia. Saavalainen has been responsible for CapMan's previous
Russian and Eastern European investments in 1995-2006."The announced transaction is a significant step in CapMan's strategy
of utilising growth opportunities within the alternative asset class.
Russia is one of the fastest growing economies with a strongly
emerging private equity market. Norum team is an excellent
acquisition target for CapMan, as it has been in the market for long
time, has a proven track record and has a good cultural fit to
CapMan's operating model," states Heikki Westerlund, CEO of CapMan
Plc."The transaction with CapMan will provide the existing Norum team
with necessary resources to fully take advantage of the opportunities
in the booming private equity market in Russia. Furthermore, CapMan's
investment experience from Russia and Eastern Europe complements
Norum team's experience," says Hans Christian Dall Nygård, Managing
Director of Norum. "Thanks to the pioneering and visionary work of
DnB NOR and Sitra Norum has become one of the leading private equity
companies in Russia. Now we look forward to grow our business further
as a part of CapMan Group."
The transaction structure and priceIn the first phase of the transaction 51% of the share capital and
voting rights of Norum Russia Fund III's management company and 100%
of the share capital and voting rights of the fund's advisory company
will be transferred to CapMan Plc's ownership. The purchase price for
the shares is approx. EUR 3.4 million. Of the purchase price one
million will be paid in cash and approx. EUR 2.4 million in CapMan B
shares through a directed issue to the Sellers. CapMan Plc's Board of
Directors has resolved on the basis of the authorization granted by
the Company's Annual General Meeting to issue a total of 982,539 new
CapMan Plc B shares. The value of each B share in the transaction is
EUR 2.43 corresponding to the volume weighted average trading price
of CapMan B shares between 22 April 2008 and 21 May 2008. After the
share issue there will be 74,990,171 CapMan Plc B shares in total.
The transaction and the resolution of the Board are in accordance
with the signed agreement conditional to that the registration
authorities of Guernsey grant the necessary regulatory approvals to
CapMan Russia Fund and management company CapMan (Guernsey) Russia GP
Ltd replacing the current Norum Russia Fund III and its management
company.
The transaction price is based on future management fees to be
received from CapMan Russia Fund and the possible future carried
interest income to be received from the Fund. The transaction price
will increase linearly with the fundraising so, that if the fund
reaches its target size EUR 150 million at its final closing the
transaction price will be approx. EUR 4.1 million, and if the fund
reaches EUR 200 million at its final closing the transaction price
will be approx. EUR 4.6 million. The possible additional transaction
price will be paid to Sellers in CapMan B shares through a directed
share issue as resolved by the CapMan Plc Board of Directors today.
There will be a three-phase lock-up for the B shares issued in the
directed share issue and for the shares issued as payment for the
possible additional transaction price. The lock-up will end three
years after the signing of the transaction, i.e. on 25 May 2011, for
all issued shares.
Put and call option for the remaining Norum shares
CapMan Plc will have the right to buy the remaining 49% of Norum
shares and voting rights when the investment period for CapMan Russia
Fund ends, that is at the latest in July 2012. The Sellers have the
right to sell their remaining Norum shares to CapMan at any time.
Depending on the final size of the CapMan Russia Fund, the
transaction price for the remaining shares will be approx. EUR
3.3-4.4 million The payable transaction price per share will however
be the same as the fundraising adjusted transaction price in the
first phase of the transaction.
The acquired companies will be consolidated in CapMan Group's figures
as subsidiaries after the closing, presumably as of 1 July 2008. In
CapMan Plc's financial reporting CapMan Russia will be part of CapMan
Private Equity business area together with CapMan Buyout, CapMan
Technology and CapMan Life Science.
CapMan Russia Fund and its investment operations
Including CapMan Plc's own commitment of EUR 13.5 million, EUR 88
million has been raised to Norum Russia Fund III i.e. CapMan Russia
Fund. The fund's target size is EUR 150 million. CapMan Plc's share
of the carried interest depends on the final fund size, and it will
be communicated in connection of the fund's final closing.
The fund's investment focus is on small and medium-sized Russian
companies with enterprise value of approximately EUR 5-50 million.
The target companies typically operate in selected industries like
consumer goods and services, manufacturing, telecom, transportation,
financial services and media, and have net sales of approximately EUR
5-100 million. The companies have strong growth potential,
experienced and motivated management and transparent business
practises."Since 1995 we have been able to develop several companies into
becoming market leaders in their niches in Russia. As the Russian
private equity industry is still under-developed, there are vast
opportunities to pursue in different industries. Our team will put
strong efforts into sourcing deals from the Russian regions, as the
growth rate of selected Russian regions is outperforming even the
strong national GDP growth rate of approximately 8%," says Hans
Christian Dall Nygård.
Press and analyst conference:
Press and analyst conference on expanding CapMan's business to Russia
and the Norum acquisition will be held in Finnish for the media and
analysts today, 26 May 2008 at 10.30 a.m. in CapMan's premises at the
address Korkeavuorenkatu 32, Helsinki. The presentation material will
be available in English on the Company's website www.capman.com at
the same time.
Additional information:
Heikki Westerlund, CEO, Senior Partner, CapMan Plc, tel. +358 50 559
6580
Hans Christian Dall Nygård, Managing Director of Norum, Head of
CapMan Russia Investment Operations,
tel. +7 812 913 7834
Petri Saavalainen, Head of CapMan Russia, Senior Partner, tel. +358
500 415 911
CAPMAN PLC
Mari Reponen
Communications Director
Investor Services
DISTRUBITION
Helsinki Exchanges
Principal Media
www.capman.com
CapMan www.capman.com
CapMan is one of the leading alternative asset managers in the Nordic
countries and manages Nordic funds with approximately EUR 3.1 billion
in total capital. CapMan has five investment areas (CapMan Buyout,
CapMan Technology, CapMan Life Science, CapMan Russia and CapMan Real
Estate), and each of them has a dedicated team and funds. Altogether
CapMan employs over 130 people in Helsinki, Stockholm, Copenhagen,
Oslo and Moscow. CapMan was established in 1989 and its B shares are
listed on the Helsinki Stock Exchange since 2001.
Norum www.norum.ru
Norum is a Private Equity manager in Russia. Since its inception in
1995 Norum has invested in 24 companies from two funds (Norum I and
Norum II), within various sectors and regions in Russia and with main
focus on Russian SME. Both funds have returned capital and hurdle to
the investors and are still operational. Investors in Norum I and II
were EBRD, DnB NOR Bank ASA, Sitra, Finnfund and CES Nordic, as well
as the key managers of the investment team. Norum Russia III Fund had
its first closing in July 2007, with investors like EBRD, FMO, IFC,
DnB NOR Bank ASA, Sitra and Innovation Norway. The team consists of
13 persons, located mainly in Moscow and St. Petersburg. After the
CapMan transaction Norum I and II funds will continue to be managed
by the Nordic Russian Management Company Oy under an agreement with
EBRD.