Private equity and debt provides an important channel for domestic investments.
Etera invests actively in unlisted companies. Investments include direct and indirect loan, mezzanine and equity investments.
Typically investments are long-term instruments and have small or non-existent secondary markets. Private equity and debt investments always consider a thorough analysis before investment decision. All investments are made on a prudent basis.
A policyholder with a valid TyEL insurance policy has the right to borrow part of the funds that have accumulated from insurance contributions paid to Etera. This also covers insurance contributions paid during the former Temporary Employee’s Pensions Act (LEL). Premium loans are always secured by a guarantee.
Investment loans have a loan period of 1–10 years. Loans are granted based on company’s debt service capacity, credit rating and the security. The loan security is usually a guarantee granted by a bank, Garantia or Finvera or real asset such as a real estate.
Mezzanine financing is a hybrid of debt and equity financing. Mezzanine financing is commonly used in financing of different arrangements and transactions and can also be suitable for fast growing companies.
Equity investments in unlisted companies
Etera invests activity in selected unlisted companies. Unlisted equity investments represent long-term investments and are expected to generate higher return that listed equities. The primary value driver is typically growth. Investments in unlisted companies promote the work and entrepreneurship in Finland.
Private equity funds
Private equity investments are expected to improve Etera’s ratio of total returns to risk. In the long run, private equity funds have yielded higher returns than listed equity markets. The portfolio is diversified geographically and over time as well as in terms of different private equity funds and investment styles.