Partnership for companies planning for an IPO

Tesi is prepared to support all types of growth companies in listing where the purpose of the IPO is to acquire financing for growth. We made our first anchor investment in October.

Listing on the stock exchange is a good option for a company seeking to raise capital for growth and internationalisation. Finnish growth companies use this opportunity relatively infrequently, however. Only one Finnish company has listed on Finland’s Nasdaq First North since it was established in 2007 for every ten companies listing in Sweden – but Sweden’s national economy is not ten times the size of Finland’s.

At Tesi, we started to question what is holding Finnish companies back.

We started wondering what is holding Finnish companies back.

MIIKKA SALMINEN / INVESTMENT MANAGER, TESI

NARROW INVESTOR BASE. The investor base in Finland is narrower than in Sweden. Here in Finland, large institutional investors, such as pension companies, predominate. They do important work developing Finnish companies also by investing in companies listing on First North, but the sums they invest are often rather small. These investors do not generally want a holding exceeding 20 per cent due to accounting and other regulatory burdens, and for similar reasons they often avoid ownership exceeding even 5 per cent.

Because the investor base is so narrow, a company seeking growth can have difficulties finding enough anchor investors to make a commitment (i.e. a promise to buy a certain amount of shares in the IPO). This is a bottleneck that prevents the investment market functioning as well as it could.

TESI AS AN ANCHOR INVESTOR. The idea emerged of providing advice and capital to support companies considering an IPO. Tesi’s anchor investment would function as a guarantee of quality that would help to enable an IPO and accelerate a company’s growth.

One of our most import tasks is to accelerate companies’ growth and develop them into domestically important economic entities. The primary focus of our investment operations is venture capital investment, but the technical format of the financing can vary according to the situation.

Matti Kangas

A company planning an IPO can lack sufficient anchor investors.

MATTI KANGAS / INVESTMENT MANAGER, TESI

WHY TESI IN PARTICULAR? Active ownership is our core activity. Tesi’s mission is to help companies grow, especially if there are constrictions or bottlenecks in the market. Alongside anchor investing, we also offer sparring to a growth company considering an IPO. The company can obtain advice about the technical details of listing publicly from its own consultants, but Tesi possesses expert knowledge of what investors expect from a listing company and how they perceive the company. This kind of support is hard to find elsewhere.

We will happily start discussions with a company at a rather early stage, when it first starts considering an IPO. We require communication with the company while we discuss various financing options, to determine whether an IPO is the best solution. We do not make a decision based solely on the listing prospectus.

LONG-TERM SUPPORT. If, during our discussions, we see that the company has good prospects but is not yet ready for an IPO, we can assist the company in making the right preparations. If necessary, we can be involved in a pre-IPO financing round to buy time for making changes.

We are a patient investor. We can support a company’s operations over the long-term also with our anchor investing to ensure a smooth transition to becoming a listed company.

We are open to partnership with all types of growth companies in listing where the purpose of the IPO is to acquire financing for growth. We made our first anchor investment in October in Viafin, a specialist in industrial maintenance and servicing.