Finland capital

Companies owned by private equity and venture capital grow twenty times faster than others

The companies owned by According to a recent impact study on the private equity industry by PwC and the Finnish Venture Capital Association (FVCA), private equity and venture capitalists (venture capitalists) are experiencing a significantly faster growth than comparable companies. Growth was very strong both in terms of turnover and staff.

According to the impact study, the annual revenue growth of private equity investors’ portfolio companies within three years of the first investment is eight times faster than in a collected comparison group with companies of the same size, operating in the same sectors. In companies that have a private equity investor behind them, the growth is 45%, while the growth rate in the comparator group is 6%.

Private equity investors invest in unlisted startups and growth companies and own a majority or minority stake in the company. The ownership period is usually 3 to 7 years, during which, as active owners, they help businesses grow. After that, the private equity investor leaves the property and the company goes to the next stage of growth, such as going public.

“In addition to the well-known Wolt, Supercell and Musti and Mirri, private equity investors have been involved in accelerating the growth of many companies in Finland. Even today, more than 600 companies focused on growth have a private equity investor as their owner, and new portfolio companies are constantly sought out,” says Jussi LehtinenPwC partner who was responsible for the study.

The number of employees in private equity investors’ portfolio companies is growing up to 20 times faster than comparator companies. The annual growth measured over a period of three years is 39%, compared to 2% in the reference companies. At the same time, the turnover per employee of the companies in the portfolio is multiplied by more than four times per year compared to the comparator group.

“The majority of the increase in the number of employees comes from the creation of new jobs as the company’s operations expand, but acquisitions are also part of the strategy of private equity investors. This group of ‘Fast-growing companies would also often have a desire to recruit more, but there is a shortage of skilled labor in both startups and growing companies,’ says Jonne Kuittinenhead of research at the FVCA.

Qualified capital accelerates economic growth

Private equity investors invest in off-exchange companies with the funds they raise. At the end of 2021, the combined turnover of the equity investors’ portfolio companies amounted to more than 20 billion euros, or about 5% of the turnover of all Finnish companies. At the same time, around 76,000 people worked in portfolio companies in Finland, which corresponds to around 5% of the number of people working in all companies in Finland. In addition, Finnish private equity investors’ holding companies employed about 18,000 people abroad.

The availability of qualified capital has also been identified as a key area for Finland’s growth in the report (in Finnish) published last year by the Sustainable Growth Working Group set up by the Ministry of Economic Affairs, Mika Lintila. According to the report, in order to ensure the availability of private equity investments, consideration should be given to ways to increase the interest and opportunities of domestic and foreign private equity investors to invest in funds. of Finnish private equity.

Through private equity funds, private equity investors invest in Finland’s most promising growth companies.

“The report results show once again that private equity investors are accelerating the growth of Finnish companies with skilled capital and creating sustainable prosperity in Finland. The owner group aiming for bold growth has a significant social impact. It is particularly underlined in this type of market situation, where growth could otherwise slow down and the development of productivity is bland”, concludes the managing director of the FVCA Pia Santavirta.

excluding tax

Source: PwC/Strategy& and Finnish Venture Capital Association