The KRR funds-of-funds managed by Tesi play an important role in Finnish growth financing. They help pension companies invest more in Finnish funds, thus providing more smart capital for growth companies. Established in 2017, KRR III – like its predecessors – invests in Finnish venture capital and small buyout funds.
The KRR funds-of-funds, managed by Tesi, focus on venture capital and small buyout funds. Over the 2008–2017 period, KRR I and KRR II have invested in altogether 20 funds that, so far, have in turn accelerated the growth and internationalisation of 150 companies.
An important goal for the KRR concept is to grow the size of Finnish funds so that they can better respond to the needs of the market.
KRR III has a total capital of€ 150million and a lifetime of roughly 15years.
“The KRR concept, on one hand, gives growth companies access to more smart capital but also gives funds access to professional and long-term anchor investors,” explains Tesi’s CEO Jan Sasse.
“Benefits can be seen at three levels. Finnish companies can raise the financing they need thanks to KRR. This is done through KRR’s portfolio funds that have been able to raise capital easier with an anchor investor. Furthermore, pension investors usually invest only larger sums in individual funds, and through the fund-of-funds concept they are able to channel their capital also to Finnish private equity funds and on to growth companies,” explains Tesi’s Investment Director Riitta Jääskeläinen.
THE FUNDS’ CONCEPT WORKS WELL. KRR has a strongly catalysing effect. The commitments of € 245 million made by KRR I and KRR II have catalysed over € 1.7 billion in investments in portfolio funds. “KRR I and KRR II have paved the way for the creation of about 20 Finnish venture capital and growth funds. These funds, in turn, will overall be involved in enabling the growth and boosting the value of some 150-200 Finnish growth companies,” explains Jääskeläinen.
The KRR concept opens funds to professional and long-term anchor investors.
“We’re delighted with Tesi’s work in KRR. The KRR concept gives us an opportunity to have an even stronger presence in the Finnish venture capital and private equity sector. And, most importantly, based on KRR I’s results, returns are at a good level – in other words, the concept works well,” comments Maarit Säynevirta, Head of Alternative Investments at the State Pension Fund of Finland.
To continue this work, KRR III was established in 2017. Co-investors with Tesi are Ilmarinen Mutual Pension Insurance Company, Keva, the State Pension Fund of Finland, Elo Mutual Pension Insurance Company, LocalTapiola General Mutual Insurance Company and Fennia Mutual Insurance Company. KRR III’s capital is € 150 million and it has a lifetime of roughly 15 years. Through KRR III, the number of portfolio companies of the whole KRR concept will increase to approximately 300.
“KRR III will continue the KRR fund-of-funds family that has proven to be both necessary and effective. The creation of new Finnish funds creates the framework for new growth stories in the ongoing saga of Finland’s growth companies. KRR has a significant impact on the fund-raising of new venture capital and small buyout funds in Finland, since many investors have not yet realised the recent positive development of returns from venture capital funds”, adds Jääskeläinen.