• Takes thematic approach to investing across resource efficiency, changing demographics and tech-enabled transformation
• GP has generated solid DPI for first and second funds with six exits in 18 months
• NG Group has the potential to be a ‘very, very good investment’ following recent continuation fund

Sweden-headquartered private equity firm Summa Equity has a strong pipeline of potential targets to acquire and expects to make further investments in 2H 2024, with its current EUR 2.3bn flagship fund around 45% deployed, founder and managing partner Reynir Indahl told Mergermarket.

“We see a lot of opportunities in circular economy, and we have several targets that we are looking at in that space. We also have a good pipeline in compliance software and a couple of opportunities in the health care sector,” Indahl said.

Earlier this month, Summa Equity acquired FAST LTA, a German provider of secure data storage and archiving solutions, and in March it announced an investment in STIM AS, a Norwegian provider and innovator of fish health products and services.

Summa Equity Fund III held a final close in January 2022. The fund was considerably bigger than its SEK 6.8bn (EUR 600m) predecessor, which closed in 2019.

“There are no current plans for a Fund IV as we still have plenty of capital left in Fund III to invest,” said Indahl.

Its investment strategy has stayed intact across fund generations, with equity ticket sizes typically ranging from around EUR 50m to EUR 400m, Indahl said. Most of Summa Equity’s investments are for majority stakes, he added.

Summa Equity is a purpose-driven thematic investment firm that invests within three themes: resource efficiency, changing demographics and tech-enabled transformation, according to its website. Its latest buyout fund was classified as an Article 9 vehicle under the EU’s Sustainable Finance Disclosure Regulation (SFDR).

Among the sectors that Summa invests in are waste and recycling, food and agriculture (such as fish farms), energy transition (such as energy efficiency, smart grid and battery storage), healthcare while its tech-enabled transformation investment theme focusses on compliance and regulatory software and cyber security, Indahl said.

Geographically, Summa Equity focuses on Northern Europe, he said.

Approximately 40% of its investor base are from the US, 40% European and British, 5% from Asia and 15% from the Nordics, Indahl said, adding that the majority of its investors are pension funds.

“Most of our investors have invested in us because they believe the thematic approach, the type of companies we invest in and our methodology, will give them higher returns. And then it is a positive added benefit that our portfolio is net positive on the carbon side and is delivering social impact,” Indahl said.

Won’t rule out further exits in 2024

Summa Equity has carried out six exits over the past year and increased the distribution to paid-in capital (DPI) in both Fund I and Fund II, returning more capital to its investors than the size of each fund, the managing partner said.

“We have been a strong liquidity provider for our investors,” Indahl said.

In January this year, Summa Equity sold its shareholding in the Swedish financial technology company Pagero AB [STO: PAGERO], to Thomson Reuters [NYSE: TRI], as reported.

In July 2023, the GP sold its 82.4% stake in Kiona, a Norway-based Software as a Service (SaaS) provider of property technology software, to Carel Industries [BIT: CRL], at an enterprise value of NOK 2.35bn (EUR 210m), as reported.

And in June 2023, Summa Equity sold its majority stake in Infobric, a Swedish provider of software solutions for the European construction industry, to Stirling Square Capital Partners, as reported.

“Over the last 18 months we exited pretty much all we planned to exit, and we see strong interest from both PEs and strategics,” Indahl said.

“I will not rule out that we will do further exits this year, but it is not something we are planning right now. But if the right buyer comes and pays the right price, then we are open to talk,” he added.

Article 9 continuation fund

In December 2023, Summa Equity closed an approximately EUR 550m Article 9 continuation fund, Summa Circular, which invested in NG Group, a Norwegian recycling and environmental services provider, which it had initially acquired via Summa Equity Fund I in 2018, as reported.

The fund was backed led by Quilvest Capital Partners and Unigestion, with participation from existing and new LPs as well as NG Group’s management team and employees, according to a press release.

In April 2023, Summa Equity released a report, Investing in a circular and waste-free Europe, which showed that 22% of Europe’s total greenhouse gas (GHG) emissions stems from material production and waste management alone. The report also showed that with existing technologies, Europe can reduce 55% of these emissions, with an investment requirement of approximately EUR 230bn by 2040 in assets and infrastructure, but with a potential value creation of EUR 1.5trn.

However, many companies do not have the capital and it is difficult at present to get financing for projects, Indahl said.

“That’s why I think Summa Equity has a role to play, because we can finance this and orchestrate building up an ecosystem,” said Indahl.

Private capital and PE firms have an important role to play in enabling the transition and this is why Summa Equity invested in NG Group, he said.

“If we can use NG Group as the biggest player in Norway, as a showcase on how to create more circular value chains, then this will be a very, very good investment for us,” said Indahl.

NG Group, which reported NOK 8.4bn (EUR 720m) operating income for FY23, has a list of more than 30 potential targets, with which it is in different stages of talks, as reported.