Significant medium- and
long-term earnings potential
CapMan’s funds manage €3.1 billion of capital raised from domestic and international institutional investors. CapMan itself is also a significant investor in the funds that it manages.
€3.1 billion capital under management
As of the end of 2011, CapMan had a total of €3,065.9 million of capital under management in its funds. Compared to the beginning of the year, capital fell by approx. €240 million following exits, and rose by approx. €35 million as a result of fundraising for the Mezzanine V fund. During the last quarter of the year, we revised our practice for calculating capital under management in our real estate funds. Under the new practice, calculations of the amount of capital managed by these funds do not take account of uninvested loan capital, on which no management fee is payable under fund agreements. This is intended to ensure that the figure given for the amount of capital under management provides a better picture of the management fee base represented by CapMan’s real estate funds. The adoption of the new calculation method reduced the amount of capital managed by CapMan as of 31 December 2011 by €271.8 million.
Of capital under management, €1,632.0 million was held in private equity funds that invest in portfolio companies. Capital under management in real estate funds amounted to €1,433.9 million. Each investment partnership – Buyout, Public Market, Russia, and Real Estate – manages its own funds with a dedicated investment team.
Funds that invest in portfolio companies had approximately €537 million available for new investments or add-on investments for existing portfolio companies as of the end of 2011. CapMan’s real estate funds have invested the majority of their capital and had approx. €61 million in investment capacity remaining, primarily for developing the existing portfolio.
Good performance of investment portfolios
As of end of 2011, CapMan Buyout, Russia, Public Market, and Real Estate funds held a total of 36 companies and 58 real estate properties in their portfolios. The overall development of portfolio companies was good during the year. The value of portfolio companies owned by funds for the entire year increased by 12% on average during 2011. The comparable figure for real estate properties, including rent income, was 6%.
CapMan funds made new and add-on investments totalling €225.3 million in 2011, of which €168.7 million was invested in portfolio companies and €56.6 million in real estate properties. The funds made nine new portfolio company investments and one new real estate investment, as well as several add-on and development investments for existing portfolio companies and real estate properties. Funds made full or partial exits from eight companies and three real estate properties.
CapMan’s other investment areas – Technology and Life Science – exited from eight companies. The development of portfolio companies in these investment areas was also good during 2011.
Cash flows to investors amounted to €333 million
2011 was net cash flow positive for our fund investors. Capital called from investors amounted to €218.5 million, while approx. €332.9 million was returned to investors. Exits from OneMed Group, Cardinal Foods, and Proxima accounted for the majority of the year’s cash flow.
Significant carried interest potential over the medium- and long-term
CapMan categorises its funds based on their life cycle stage, into 1) funds generating carried interest, 2) funds in exit and value creation phase, 3) funds in active investment phase, and 4) funds with no carried interest potential for CapMan. Exits made from funds in the first category generate carried interest for CapMan, whereas funds in the exit and value creation phase are expected to start generating carried interest within one to five years. The carried interest potential of funds in the active investment phase is expected to be realised during the next five to 10 years. The funds in the last category have no carried interest potential for CapMan, either because CapMan’s share of the carried interest percentage is small or the funds are not expected to generate carried interest.
As of the end of 2011, funds in carry represented 1% of invested equity capital at fair value. A large proportion of capital (48%) was held in funds in the exit and value creation phase. These funds contain significant earnings potential over the short and medium term. Funds in the active investment phase account for approx. 39% of invested equity capital, and funds with no carried interest potential for CapMan approx.12%.
Read more: Funds at the end of year 2011