CapMan acquires 28.7% of investment firm Norvestia from Kaupthing
– Norvestia becomes an associated company of CapMan as a result of the transaction.
– In Norvestia CapMan sees growth opportunities in private equity especially related to minority investments based on active ownership.
– The transaction does not change CapMan’s earlier outlook estimate for 2015.
– The transaction is executed in two phases: in addition to the 21.7% of Norvestia’s shares acquired today, CapMan has the right and at Kaupthing’s request an obligation to purchase 7.0% of Norvestia’s shares outstanding from Kaupthing around October 2015. As a result, CapMan’s ownership of Norvestia will amount to 28.7% after the transaction is finalised.
Norvestia Plc (Norvestia) is a listed investment company with approx. 5,500 shareholders. The company invests in listed shares both directly and indirectly, credit instruments, private equity and other funds and makes minority investments in unlisted companies.
“We perceive Norvestia as an interesting development opportunity and its operations in minority investments as a strategic growth area for CapMan. This transaction complements our current set of tools to participate in the growing and increasingly diverse private equity market. We believe that the company’s strong balance sheet of approx. €160 million and evergreen structure are well-suited for minority investments also in situations where the investment horizon is longer than five years, which is typical for private equity. In our view, the current allocation for private equity investments – approx. 9% – can be increased significantly. The allocation can also be increased through selective investments in private equity funds,” comments Heikki Westerlund, CapMan’s CEO.
CapMan’s unaudited pro-forma balance sheet increases to approx. €160 million as a result of the transaction. CapMan finances the transaction with €45 million in long-term bank financing, taking advantage of the ample availability of financing and low interest rates. Transaction fees amount to approx. €1 million in total.
“This transaction also supports our objective to diversify and actively invest from our balance sheet. The fair value change of the associated company is booked according to IFRS 13§ in CapMan’s income statement based on the change in Norvestia’s NAV,” says Niko Haavisto, CapMan’s CFO.
The details of the transaction
The transaction is executed in two phases. In the first phase, CapMan Plc (CapMan) has today acquired 3,321,817 series B shares of Norvestia Plc from Kaupthing h.f. (Kaupthing) at €10.09 per share, or €33.5 million in total. The consideration is based on Norvestia’s Net Asset Value (NAV). The acquired shares represent 21.7% of Norvestia’s total shares outstanding and 14.2% of votes.
CapMan and Kaupthing have today requested Norvestia to call an Extraordinary General Meeting (EGM) to handle a proposal for the combination of the share classes of Norvestia and a proposal for resolution on the number and election of the members of Board of Directors by way of amending the Articles of Association. If Kaupthing would not at the EGM support the combination of the share classes or the election of the new board, CapMan may have the right to rescind the sale and purchase of shares.
CapMan and Kaupthing will request Norvestia’s EGM to resolve upon the combination of Norvestia’s two share series so that series A shares, which carry 10 votes per share, and series B shares, which carry one vote per share, will be combined to form a single series. The request specifies that Norvestia’s series A shareholders will not be compensated for the conversion. All series A shares are owned by Kaupthing. Following the combination of share series, every Norvestia share has one vote and equal rights.
In the second phase of the transaction, the parties of the transaction have agreed that CapMan has the right and at Kaupthing’s request an obligation to purchase an additional 7.0% of Norvestia’s shares outstanding, or 1,072,159 shares, from Kaupthing around October 2015 based on a predetermined purchase price. CapMan owns 28.7% and Kaupthing 4.0% of Norvestia’s shares and votes following the second phase of the transaction and the combination of the share series.
The parties of the transaction have noted that the change in Norvestia’s ownership should be reflected in the composition of its Board of Directors. CapMan proposes to Norvestia’s EGM that Georg Ehrnrooth, Marika af Enehjelm, Niko Haavisto, Hannu Syrjänen and Heikki Westerlund will be chosen as members of the Board of Directors and that Heikki Westerlund will be chosen as the chairman and Hannu Syrjänen as the vice chairman.
Heikki Westerlund continues: “As an active anchor owner we can provide many positive suggestions to develop the company. The combination of share series, the facilitation of private equity investments and a review of the capital structure are only some examples. Norvestia’s minority investments complement CapMan’s existing investment operations and do not compete with them. We have seen many interesting potential investments during the last few years that do not fit with the investment strategy of our existing majority investment focused private equity funds. Typically these companies are entrepreneurial and extremely growth focused family businesses.”
Kaupthing is an Icelandic bank controlled by a court ordered winding-up committee, which manages and realises the assets of Kaupthing on behalf of its creditors. Kaupthing acquired a third of Norvestia’s outstanding shares in 2003 and has been the company’s largest shareholder since.
Norvestia Oyj is a publicly listed investment company. Norvestia Group mainly invests in Nordic shares, equity funds, hedge funds, bonds, in the money market and in industrial investments. The company was founded in 1984 and its series B shares are listed on the Helsinki Stock Exchange since 1985.
Source: CapMan Press Release