Excellent reflection! Let’s break down your arguments a bit and start with sales costs. If we consider that the company would hire, say, 5 people for international sales and their costs would be 400k/year, that would mean 2m/year, or about a 7% reduction in profit. A 5-person team would already be very large, and this scale would naturally not be pursued without some evidence of interest. With this hypothetical 5 people, I merely tried to emphasize the scale. If, on the other hand, placement agents are used, they take a certain percentage of ongoing fees. So, I don’t really see the financial investments being particularly large, and this growth should scale nicely.
Lux structures. We agree on this; international sales are easier for Lux structures. Of course, for example, Evli has successfully done this also with domestic products, but even Evli has admitted that the volume would have been better with Lux structures. In my opinion, as part of international investments, the company should also establish Lux structures and related support functions. In monetary terms, these investments are not very large according to my understanding, but they do take time and effort.
Are eQ’s products competitive enough? Now we’re at the heart of the matter, my friend! In Finland, competition in the PE sector has been limited, and buyers have had a strong desire to increase their PE allocations. Additionally, in Finland, eQ has had an extremely strong brand and a strong sales team (they know the customers, etc.). In international markets, you have none of this. In international markets, eQ must follow the same recipe as Mandatum/Evli/Aktia/Taaleri, as a boutique asset manager with certain very high-quality products. In my opinion, an international breakthrough would be a very strong indication of the quality of the company’s products. Currently, the probability of success in international markets is very difficult to assess, and I have not loaded any strong expectations for it into my sales forecasts. I also remind you that building international sales from scratch is slow. Customers don’t know you beforehand and make large one-time investments, so sales cycles can last considerably long. It’s not at all impossible that you get on the radar of institution X during the first year, and after that, institution X follows your development for 1-2 years before they are possibly ready to make an investment in your fund (a long due diligence process may still be involved with these investments).
So, in summary, no quick impact on profit will be gained from here; rather, this is more about building a foundation for growth towards the end of the decade.