Focus on Finland, Part 3: Investments from Finland
Under the pressure of the global economy, many Finnish companies have transferred manufacturing from Finland to China and to other countries with lower labor costs. Recently there has also been transfers of R&D. In many cases, the transfers are executed by incorporating a new company overseas, but also through acquisitions and joint ventures. On the other hand, many Finnish companies, especially the high-tech sector, have marketed, or at the very least targeted, their focus outside Finland. Consequently, it is common that Finnish companies have subsidiaries and joint ventures outside Finland.As mentioned earlier, there are practically no limitations regarding investments made from Finland and Finpro in assisting Finnish companies, especially small and medium size companies, to invest overseas. Finpro also has locations in the United States.
According to the statistics of the Finnish Venture Capital Association, in 2009 private equity firms located in Finland made investments to Finnish and foreign companies at the value of 362 million euros, nearly equaling the amount invested during 2008. The amount was invested to 230 different target companies in 350 transactions and the value per transaction increased compared to the previous year. 82 million euros out of 362 million were invested into 171 venture capital stage companies in 257 transactions and 280 million euros were buyout investments made to 59 target companies in 93 transactions. 14% of the amount invested went outside Finland and only 2% outside Europe. Even though Finland has several incentives available for all companies located in Finland, the government is not that active in investing. In 2009, the share of investments made by public sector was 6% of the entire amount invested and 5% of the transactions.
Finnish companies have also been quite active in acquiring foreign companies. In the beginning of 2000, the Finnish paper company Stora Enso acquired the U.S. company Consolidated Papers with 70% premium. This transaction was not a success story for the purchaser and the North American operations have already been divested. Nokia has been active in acquiring U.S. companies like Intellisync Corp, Loudeye Corp, Twango, Meta Carta Inc., Navteq and the latest acquisition Novarra Inc. The number of the acquired U.S.-based high-tech companies indicates the strength of the U.S. high-tech industry and the purchase price of Navteq amounting to 8.1 billion shows that it is not only nickels-and-dimes that are spent.
A special thanks to Ville Heikkinen, Sullivan & Worcester’s Finnish intern, for his assistance in preparing this post.
