Summa Equity closes debut fund on SKr4.5bn hard-cap

Set up by former Altor and Nordic Capital execs, the fund will make 'megatrend driven' investments in the Nordic lower mid-market, managing partner Reynir Indahl has told PEI.

Summa Equity, a Nordic lower mid-market firm, has smashed through its initial SKr3.3 billion ($372 million; €349 million) target to close its debut fund on SKr4.5 billion.

Summa Equity was set up in 2016 by five partners – Reynir Indahl and Johannes Lien, formerly at Scandinavian private equity house Altor, Tommi Unkuri and Jenny Keisu, formerly at Nordic Capital, and Christian Melby, formerly at Norwegian firm Norvestor Equity.

The fund began pre-marketing in early 2016 and officially began fundraising over the summer, managing partner Indahl told Private Equity International. The vehicle was oversubscribed, but capped at SKr4.5 billion based on the part of the market the team wishes to target.

Most of the firm's limited partners – which comprise endowments, foundations, pension funds, insurance firms and funds of funds – are from continental Europe and the UK, followed by the US, and then the Nordic region.

According to sources with knowledge of the fundraising, investors in the fund include LGT Capital Partners, Adveq, HarbourVest Partners, Norwegian groups Storebrand and Gjensidige Forsikring, and RobecoSAM.

The Summa Equity team made a SKr100 million GP commitment to the vehicle.

Rede Partners acted as placement agent for the fundraise.

Indahl and Melby are based in the firm’s Oslo office, while Lien, Unkuri, and Keisu are based in Stockholm. All of the partners will work across the entire Nordic region.

Following an increasing trend of onshoring in the region, the fund is domiciled in Sweden.

Summa’s investment thesis is to target pockets of growth within a volatile and low-growth environment, Indahl said.

“We believe we live in quite a challenging world and times, where the uncertainty and risk globally is higher than ever,” he said.

“Both political risk, environmental issues, social issues that you see with the manifestation of the Brexit and the election of Donald Trump etc. And also we have been plagued by lower growth than expected in the Western world.”

The question, therefore, is how to invest in a world where the only certainty seems to be low growth? The answer, Indahl said, is to be “megatrend driven”.

Summa identified six megatrends – global population growth, resource scarcity, aging demographics, movement of people, energy efficiency and technology disruption – that it believes “will cause superior growth in parts of the economy and that might be even counter-cyclical or independent of the general GDP growth”.

These six megatrends gave rise to Summa’s four investment themes: resource scarcity, energy efficiency, changing demographics and tech-enabled businesses.

Summa Equity Fund I will seek to make between 10 and 15 investments, writing average equity cheques of around €35 million, Indahl said. It will target growth companies ripe for expansion, internationalisation and consolidation.

The firm has already made two investments – in Sortera, which collects and recycles building material waste in Sweden, and eGain, a Nordic company that allows remote heating control in multi-apartment buildings – and is about to close its third, in Gothenburg-based Lin Education.

“It’s the leader in digitising the Swedish educational system,” Indahl said of the business. “It’s on the hardware side and the software and content side. It fits into our changing demographics theme, which is healthcare and education and a few other sectors.”

For Summa, ESG is a key tool in its value creation toolbox, Indahl said. The firm will be the first in the Nordic region to track its portfolio against the UN Sustainable Development Goals. These are 17 goals relating to sustainability issues including zero hunger, affordable and clean energy, and quality education that the UN wants to achieve by 2030.

Summa’s target investment sectors are ones in which ESG factors are very important, Indahl said.

“We want to make sure that our portfolio [companies] focus on ESG and that they contribute positively to the UN sustainable development goals,” he said.

“You can increase the revenue growth and the margins if you focus on the important and material ESG factors. We don’t see it as a trade-off, we actually see it as a smart way of developing these companies. Companies that ignore material ESG factors underperform over time.”