Our portfolio companies
achieved their growth and
profitability targets in 2011
CapMan Russia makes minority investments in small and medium-sized Russian growth companies. We help our portfolio companies to pursue growth, both domestically and internationally.
CapMan Russia was one of the most active private equity investors in the Russian market during 2011. We made four new investments and several add-on investments, valued in total at €20.6 million. The team has made a total of 27 exits to date, of which 23 have been profitable. The exits have generated an average return of 2.0 times the initial capital invested. Our previous fund (Norum II) will return more than 4 times the initial capital invested.
Despite the overall increase in uncertainty on global markets during the year, the Russian economy continued to develop favourably. GDP increased by approx. 5% during 2011 and short- to medium-term growth prospects are very good. Russia’s sovereign debt is modest (at around 2.5% of GDP), which will allow the Russian economy to adapt relatively painlessly should growth prove to be lower than expected.
Our portfolio companies developed well during 2011. The strong Russian economy contributed to this, and all our portfolio companies achieved their growth and profitability targets, with many of them outperforming their budgets. As our portfolio companies have a relatively conservative level of leverage, we believe that they are well-placed to succeed even if overall economic growth will be lower than expected during the coming years.
Targeting sustainable growth and technological leadership
Value creation in our portfolio companies is primarily based on two factors: sustainable business development and the introduction of new technologies. In the case of sustainability, our key focus is on creating and developing transparent and efficient governance models, together with companies’ management teams and other owners. In addition, addressing environmental and social issues in company operations offers an increasingly valuable competitive edge in Russia. In encouraging the introduction of new technologies, we draw on the contacts and long-term expertise in a number of fields of CapMan’s other investment teams and the CapMan Portfolio Board Network. Russian companies in general often lag significantly behind Western businesses in adopting new technological innovations, and by capitalising on cutting-edge technology, our portfolio companies have the potential to secure a major competitive advantage primarily in Russia but also internationally.
The current CapMan Russia fund can make two to three new investments before reaching the limit of its investment capacity. The plan is to begin fundraising for a new fund during 2012. We have already identified a number of potential new investment targets. The Russian private equity market is projected to develop favourably over the next few years, and we are confident that our team is well-placed to continue its successful operations in Russia in 2012 and beyond.