CapMan Russia fund closes at EUR 118.1 million
CapMan Russia fund closes at EUR 118.1 million, acquisition price for Norum decreases to EUR 7.3 million
Fundraising for the CapMan Russia fund has ended and the fund was closed at EUR 118.1 million. Following the final closing the purchase price of the Norum acquisition, which was announced by CapMan in May 2008, will decrease to EUR 7.3 million. CapMan Russia fund invests predominantly in mid-sized companies based in Russia.
CapMan Russia has good resources for new investments
The CapMan Russia Fund (formerly Norum Russia Fund III) was transferred under CapMan's management on the closing of the Norum transaction on 27 August 2008. CapMan Plc's commitment to the fund is EUR 13.5 million.
"The market environment has changed dramatically during the fundraising. The last months have been extremely tough for getting new commitments to the fund. We are very satisfied with the fund size, which gives us good capacity to make new investments in Russia. The amount of quality deal flow is currently at a high level," says Hans Christian Dall Nygård, Head of CapMan Russia Investment Operations.
CapMan Russia fund's investment focus is predominantly on mid-sized companies based in Russia, which have an enterprise value of approximately EUR 5-50 million. The target companies typically operate in selected industries, such as consumer goods and services, manufacturing, telecoms, transportation, financial services and media. The companies have net sales of approximately EUR 5-100 million combined with strong growth potential, experienced and motivated management, and transparent business practices. To date the fund has made investments in Region Avia Airlines, a Russian private airline, and in Russia Baltic Pork Invest ASA, a pig farm operator.
The acquisition price for Norum decreases to EUR 7.3 million
Following the final closing of CapMan Russia fund, the purchase price for the Norum acquisition will be decreased from EUR 8.0 million to EUR 7.3 million. The original purchase price was based on estimated final fund size of EUR 150 million. Of the purchase price EUR 3.4 million has already been paid to the sellers, who are company management, DnB NOR ASA and Sitra Management Ltd. The paid amount corresponds to 51% ownership of Norum, which was transferred to CapMan Plc's ownership on 27 August 2008. The additional purchase price to be paid for this stake is approx. EUR 0.3 million. CapMan Plc Board of Directors has decided in its meeting on 7 April 2009 that the additional purchase price will be paid to the sellers in cash and in CapMan Plc B shares owned by the Company. According to the original transaction terms the value of each B share in the transaction is EUR 2.43. Altogether 109,204 B shares will be used as part of the additional purchase price payment.
In line with the original transaction terms CapMan Plc will have a liability to buy the remaining 49% of Norum shares at the latest in July 2012 and the sellers will have the right to sell their remaining Norum shares to CapMan at any time. The payable transaction price per share for the remaining Norum shares will be the same as the fundraising adjusted transaction price in the first phase of the transaction. The purchase price for the remaining Norum shares shall be paid either in cash, in CapMan Plc B shares or the combination of those, depending on CapMan Plc's decision at the time. If the payment shall be done in B shares, the value of those will be determined based on the volume weighted average trading price thirty (30) days preceding the date when the sellers have exercised the put option.
CapMan Plc's liability to buy the remaining Norum shares has been recorded in CapMan Plc's balance sheet in Other loans for the value of EUR 4.4 million, which will be adjusted to approx. EUR 3.6 million following the final fund size. Correspondingly the goodwill allocated for the transaction will be adjusted from EUR 6.5 million to approx. EUR 5.8 million. The adjustments will have no impact on CapMan Plc result.
Following the final closing of CapMan Russia fund CapMan Plc's share of the possible carried interest to be generated by the fund is also determined. CapMan Plc will receive 3.4% of the fund's cash flows if the fund is generating carried interest. CapMan Plc's generally low carried interest share in this fund results from the fact that part of the fund was already raised before its transfer under CapMan's management.
More detailed information on the transaction can be found in the stock exchange releases published on 26 May 2008 and on 27 August 2008, available at CapMan's Internet pages at http://www.capman.com/En/Media/Releases/2008.