Cashing In on Global Threats Lures Investors to New Nordic FundBy and
Summa Equity raised almost $500 million for its first fund
Says investors are looking for funds with sustainability focus
There’s a new Nordic buyout fund that’s drawing in investors eager to make money by responding to demographic and climate-related threats.
Summa Equity, which was created by private equity veterans from Sweden and Norway, closed its first fund last month, raising 36 percent more than it targeted, or 4.5 billion kronor ($498 million). The fund will invest in companies that stand to benefit from changes in population dynamics and a scarcity of natural resources, among other major global shifts.
“We believe these mega trends will drive structural growth in a number of industries,” Tommi Unkuri, one of Summa’s 5 partners, said in an interview at its offices in central Stockholm. “We also want to invest in companies that have positive solutions to problems associated with these trends.”
Private equity is attracting a lot of money these days. Last year, the industry raised $589 billion in capital, globally, according to Bain’s Global Private Equity Report 2017. It was the fourth consecutive year with total fundraising topping half a trillion dollars.
“Our bet was that this was the right time to do it, and that proved to be right,” Summa Partner Jenny Keisu said. “It’s a good climate to raise capital, especially if you’re an established player, but for a first-time fund it’s always difficult so we were far from sure that we would succeed.”
Keisu, a former general counsel at Nordic Capital, said many investors Summa approached were looking for a private-equity fund that focused on sustainability. The partners attracted backing from pension funds, foundations, insurance firms, fund-of-funds and endowments like the University of Michigan.
The fund will have a Nordic focus and plans to make investments in 12 to 15 companies, partner Johannes Lien said. It’s so far invested in three. The most recent addition was Lin Education, a Swedish provider of digital content, training and services to schools.
Summa’s now looking at Norway’s fish-farming industry “to see what the opportunities are in different stages of the value chain,” Lien said. “The world needs to feed a growing population and fish farming is one of the most efficient ways of doing that.”
The fund’s purchases to date were made without any competing bids and Unkuri says the intention is to continue to act before other potential buyers arrive on the scene.
“There are many private-equity firms that have an ambition to find their own deals, but it comes back to the strategy,” he said. “If you have a clear picture of what you prefer and have deep knowledge about the subjects you focus on, you are well positioned to do a good job.”
Like Keisu, Unkuri has a background at Nordic Capital. Summa’s Oslo-based managing partner Reynir Indahl was previously a partner at Altor Equity Partners, where he worked with Lien. Summa has linked the level of its carried interest to the fund’s net returns to limited partners.
“We have a lot of skin in the game and believe strongly in our strategy,” Keisu said.