CapMan's Strategic Moves: A Dual Focus on Sustainability and Growth

October 5, 2024, 4:33 am
CapMan
CapMan
Location: Finland, Mainland Finland, Helsinki
Employees: 51-200
Founded date: 1989
In the fast-paced world of finance, agility is key. CapMan, a Nordic private asset management firm, is making waves with two significant announcements that highlight its commitment to sustainability and strategic growth. The firm recently achieved stellar ratings in the GRESB assessment, while simultaneously divesting its service business, CaPS, for a substantial sum. These moves reflect a calculated approach to enhance its core operations and strengthen its market position.

CapMan Infra has struck gold with its recent GRESB ratings. The firm’s first fund, CapMan Nordic Infrastructure I (CMNI I), scored a remarkable 94 out of 100, earning a coveted five-star rating. This achievement places it in the top quartile of GRESB benchmarks, a significant accolade in the realm of Environmental, Social, and Governance (ESG) performance. The firm’s second fund, CapMan Nordic Infrastructure II (CMNI II), also made a splash, securing a five-star rating for its pre-operational assets.

GRESB, the global benchmark for ESG performance, has become the gold standard for asset managers and investors. It assesses the sustainability practices of real assets worldwide. CapMan’s success in this arena underscores its commitment to enhancing the sustainability performance of its assets. The firm’s proactive measures have resulted in improved asset-level scores across the board, showcasing a dedication to environmental stewardship.

The standout performer within CMNI I was Koiviston Auto, Finland’s leading bus operator. It achieved a score of 93, an impressive eleven-point increase from the previous year. This leap was fueled by enhanced ESG risk assessments and a more robust environmental reporting framework, particularly in addressing air pollution. Such improvements are not just numbers; they represent a tangible commitment to reducing the carbon footprint and promoting cleaner transportation.

Meanwhile, CMNI II's performance was bolstered by Skarta Energy, a newcomer in the renewable energy sector. With a score of 84, Skarta demonstrated strong ESG practices, aligning perfectly with CapMan’s sustainability goals. The firm’s commitment to embedding ESG principles into its operations is evident, with a focus on clear objectives and robust policies.

However, CapMan is not resting on its laurels. The firm has also made a strategic decision to divest its service business, CapMan Procurement Services (CaPS), for EUR 75 million. This move is a calculated step to refocus resources on its core business of private asset fund management. By selling CaPS, CapMan aims to streamline operations and enhance its growth trajectory.

CaPS has been a valuable asset, established 15 years ago to support CapMan’s portfolio companies. Over time, it evolved into a standalone platform with over 280 members and 290 vendors. In 2023, CaPS reported a turnover of EUR 10.2 million and an operating profit of EUR 5.9 million. The decision to sell was not taken lightly, but it aligns with CapMan’s strategy to concentrate on its primary business.

The transaction is expected to close by the end of October 2024, with no conditions precedent to closing. This swift execution reflects CapMan’s agility in the market. The sale will have a positive impact on the firm’s earnings, liquidity, and overall financial health. With an immediate cash flow boost of approximately EUR 60 million, CapMan is poised to strengthen its balance sheet significantly.

The proceeds from the sale will be strategically allocated to grow the private asset fund management business, reduce debt, and enable robust dividend distributions in the coming years. CapMan’s Board of Directors anticipates proposing a total dividend of EUR 0.14 per share at the Annual General Meeting in 2025. This move signals confidence in the firm’s future growth and profitability.

CapMan’s leadership has expressed pride in the growth of CaPS, acknowledging the hard work of its team over the years. However, the time has come to pivot. The firm’s focus is now on scaling its flagship funds and introducing new products to the market. This shift is essential for maintaining competitiveness in a rapidly evolving financial landscape.

As CapMan navigates these changes, it remains committed to its sustainability goals. The firm has set ambitious greenhouse gas reduction targets in line with the Science Based Targets initiative, aiming for net-zero emissions by 2040. This commitment to sustainability is not just a trend; it’s a core principle that guides CapMan’s investment strategies.

In conclusion, CapMan is at a crossroads, balancing sustainability with strategic growth. The firm’s recent achievements in GRESB ratings highlight its dedication to ESG principles, while the divestment of CaPS marks a significant shift in focus. As CapMan continues to refine its operations and enhance its market position, it sets a powerful example of how financial firms can thrive in a competitive landscape while prioritizing sustainability. The road ahead is promising, and CapMan is poised to lead the way.