CapMan - Private Market Pioneer in the Nordics

Stocks
22

Carried interest, or carry, indeed refers to profit-sharing returns. “Profit-sharing returns” is quite a mouthful, and in practice, it means performance-related fees that a fund manager receives from a fund when the fund’s return exceeds a certain pre-agreed level.

CapMan is indeed more difficult to analyze than other traditional asset managers. However, there has been a clear improvement in the last 24 months, as CapMan has revamped its segment reporting and moved significantly towards being more owner-friendly (from a partnership to a genuine publicly traded company).

Aitiot (boxes) :joy::clap:

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23

What is the potential impact (+/-) of Capman’s Avidly position on Capman as a whole?

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24

I agree with the previous comments: why not in Finnish, then there would be no need to translate the meanings of individual small details. Not all readers are bankers and investment analysts!

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25

If Saul is to be believed, then just add more Capman to your portfolio.
Luckily, I’ve held onto these, even though there are other temptations in the market.
I’ll buy more gradually, or as long as it stays under 2€.

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Capman’s rise stalled a bit, though the share price is okay in the numbers.

Now, a positive surprise would be welcome so we could reach the 1.80 level!

27

There’s an article in Helsingin Sanomat about a building at Ruoholahdenkatu 4, where CapMan is reportedly taking several million in costs themselves because the construction company, Lapland, screwed up badly… Didn’t that same construction company mess up some other site too? Of course, that construction company is bankrupt..

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So it’s Capman’s Nordic Real Estate’s Helsinki subsidiary.

Full story: Kerrostalon julkisivu uusittiin kahdesti kolmessa vuodessa: ”Kaikki, mikä voi mennä pieleen, meni pieleen” | HS.fi

"Lapis Rakennus Oy, to whom the residents had lost trust, was responsible for the alteration work.

“In addition to its original mistakes, Lapis [Rakennus] probably made further mistakes in the repairs as well. It used numerous subcontractors, its tools and money got mixed up, so it was decided that this couldn’t continue, and they switched to another construction company,” Lehtinen explains.

Lapis Rakennus was in the headlines when it bought the former Customs Board building from Senaatti Properties for 26.5 million euros in 2015. Lapis intended to convert the two valuable buildings bordered by Erottajankatu, Uudenmaankatu, and Yrjönkatu into residential buildings.

The next headlines then reported the company’s bankruptcy in 2018.

The alteration work at Ruoholahdenkatu 4 was ordered and financed by the Helsinki subsidiary of the real estate fund Capman Nordic Real Estate.

“We’re talking millions,” estimates partner Juhani Erke from Capman.

Erke, who is responsible for the investment in the property, talks about the repair costs of the errors made in the property’s alteration work. The company largely covered these costs itself, for now. Only the costs of the latest facade renovation were partly shared with the housing company’s shareholders.

“The contractor [Lapis] later went bankrupt. We have ourselves funded repair work inside the building and finally the facade repair. We are now putting things right at the site and will, of course, claim our receivables back from the bankruptcy estate in due course,” Erke says."

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It must be remembered that CapMan was only involved in the renovation of Ruoholahdenkatu 4, not the 26.5 million euro Customs Board project. The Customs Board building was Lapis Rakennus’s own project, for which they apparently received money through Privanet. This caused quite a stir earlier. Privanet on saanut merkittäviä vahingonkorvauskanteita Lapis-sijoittajilta - Inderes

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Yeah, that’s what I was referring to with Privanet, I just couldn’t remember it offhand.

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@Sauli_Vilen’s comments?

A few million is two to three percent of the result?

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That is a CapMan fund investment, meaning it has no direct impact on CapMan. Of course, it will weaken the fund’s returns, which in turn will reduce CapMan’s potential profit-sharing returns. However, this is just one investment among others in the fund, and the impact of a single investment on the fund also remains limited. All in all, the impact on CapMan is very marginal.

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33

Sauli mentioned that things are progressing well at CapMan and the figures, along with the comments, looked good.

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34

I’m guessing the target price will be raised soon.

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35

Already raised. Target 2e.

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36

Capman apparently sold Kämp Collection Hotels. I wonder what kind of return Capman made on that.

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Yeah, sounds like a big deal and the cycle is probably at its peak. There was just an article in Helsingin Sanomat or something about the Helsinki hotel scene and how new capacity is coming in hard now because too little was built before…

@Sauli_Vilen?

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38

Surely a good move by Capman. The owner is grateful :smile:

It’s just a shame that great Finnish brands are going into foreign ownership. One by one.

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Remember that the target (like all other companies owned by CapMan) are in CapMan’s funds. CapMan is always a minority investor in the funds (ownership typically 5%, in exceptional cases it can be around 10%). Thus, for example, the sale of Kämp does not directly benefit CapMan, but CapMan’s fund investors. CapMan benefits from the good performance of the funds in two ways: 1) CapMan receives carried interest from well-performing funds, which can be very significant at their best. 2) Good fund performance improves CapMan’s position as an asset manager, and naturally, an asset manager with a good track record can more easily raise capital at better fee levels.

Kämp was sold from the Buyout 10 fund (established in 2013), and there are 4 targets left in it. At the 11/2018 CMD, the company stated that the fund’s realized IRR was 27%, which is an exceptionally good level. The fund will most likely go into carried interest distribution, and if the return level remained at 20%, the carried interest potential for CapMan would be very large (in the range of +20 MEUR). The fund’s development and targets can be followed on CapMan’s website: CapManin vuosi - CapMan

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Good point. Thanks @Sauli_Vilen

This is a very good example that you can invest in funds and (and earn from them) in two ways: directly into a fund or into a (good) investment company that trades funds. I am strongly in favor of the latter approach.

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41

Good point, I myself assumed a more direct/larger direct position!

Apparently, a good price was still achieved:

Norwegian Billionaire Who Bought Kämp Spoke Finnish: “It’s wonderful to be here, even though it’s so expensive”

…Stordalen said at the press conference that the acquisition was his biggest transaction ever.

…We will own one hundred percent of Kämp, and it will never be sold again, Stordalen promised.

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