Armada Mezzanine Capital is an independent financing provider investing in small and medium-sized companies and buy-outs in the Nordic countries. Armada manages three mezzanine funds with a combined capital base of over €250 million and has offices in Helsinki and Stockholm.
Since 2000, the Armada team has invested mezzanine capital and other forms of private debt in close to 40 Nordic-based companies, usually supporting leading private equity sponsors in their buy-out transactions. Armada’s investment team is supported by an Industrial Advisory Board consisting of experienced industry and finance sector professionals.
Armada is currently investing from its fourth fund, Armada Mezzanine Fund IV, amounting to €103 million. The fund was established in May 2014. Armada’s preceding fund, Armada Mezzanine Fund III made ten mezzanine and other private debt investments across all four Nordic countries.
Armada fund investors include inter-alia European Investment Fund, Finnish State Pension Fund, Finnish Industry Investment, Nordic Investment Bank, Sonera Pension Fund, Varma, Access Capital Partners, Suomi Mutual, Tradeka-invest, Elo Mutual Pension Insurance Company, OP Life Assurance Company and Sandvik Pension Fund.
Armada is registered as an Alternative Investment Fund Manager by the Financial Supervisory Authority in Finland. Armada follows the United Nations Principles for Responsible Investment.
Armada invests across the Nordic countries, typically in private equity sponsored transactions, involving lower midmarket companies with enterprise values up to €150 million. The sector focus is broad.
Armada also seek investment opportunities involving non-sponsored companies requiring financing for e.g. acquisitions, generation shifts, refinancings and general expansion.
The cornerstones of the investment process include flexibility in structuring and pricing, streamlined decision-making process and a proactive origination approach.
Target companies typically possess the following key characteristics:
- Stable and predictable cash flow profile
- Adequate solidity
- Attractive growth opportunities
- Experienced management team
- Sustainable barriers to entry
- Sustainable competitive advantages
Armada manages three mezzanine funds: Armada Mezzanine Fund IV, Armada Mezzanine Fund III and Armada Mezzanine Fund II, of which Armada Mezzanine Fund IV is in an active investment phase.
ARMADA MEZZANINE FUND IV
- Final closing in May 2015
- Fund size €103 million
- Investment focus: Senior and subordinated financing to Nordic small and medium-sized companies
- Buyouts, recapitalizations and expansion financing
- Investments up to €15 million in one company
- Current portfolio: 8 investments out of which 4 fully exited
ARMADA MEZZANINE FUND III
- Final closing in April 2009
- Fund size €103 million; closed for new investment
- Current portfolio: 10 investments out of which 4 fully exited
ARMADA MEZZANINE FUND II
- Final closing in March 2006
- Fund size €53 million; fully invested
- Current portfolio: 8 investments out of which 6 fully exited
Cambio Healthcare Systems AB
Healthcare information and management systems.Armada Mezzanine
CTEK Group AB
Switch mode battery charger manufacturerArmada Mezzanine
Leading provider of accounting software and hosting of data to the Norwegian SME market.Armada Mezzanine
Wallpaper manufacturerArmada Mezzanine
Energy, telecom and industrial sector services.Armada Mezzanine
Active temperature-controlled air transportation solutions.Armada Mezzanine
Holmes Place Germany
Provider of premium health and fitness clubs in Germany.Armada Mezzanine
Inmeta Crayon AS
Services for managing corporate software and licences.Armada Mezzanine
Leading provider of damage control services focusing on water, fire, asbestos and mould damages.Armada Mezzanine
Restaurant chain with an authentic Italian concept.Armada Mezzanine
Prosero Security Group AB
Installation and service of locks, alarms and surveillance solutionsArmada Mezzanine
What is Private Debt Financing?
Private debt instruments include, by example, senior debt, Mezzanine debt, and other forms, or combinations, of subordinated debt and equity-linked instruments that are not publicly quoted.
What is Mezzanine?
Mezzanine is a loan instrument that sits between senior debt and equity in the capital structure. It is often used in situations where bank financing is not adequately available, thus replacing part of the equity need. Mezzanine financing shares characteristics of both equity and debt. It includes a subordinated loan component, which is complemented by some form of equity-related feature such as warrants.
Uses of Mezzanine
Mezzanine is mostly used in private equity sponsored acquisitions, management buy-outs and recapitalizations, and in financing of both organic and acquisition-led growth of individual companies. In a buy-out transaction where Mezzanine financing is involved, the instrument typically amounts to 10-30% of the total capitalization.
The main benefits Mezzanine capital provides are:
- Enhanced return for equity investors due to reduced amount of equity required in the transaction
- Fills the financing gap caused by limited access to senior debt or equity
- Minimized equity dilution for shareholders and lower cost of capital relative to equity
- Flexible financing structure, meeting the specific needs of borrowers
- Promotes growth and reinvestments of cash flows in the business via typically non-amortizing feature and use of possible PIK-interest (“capitalized interest”, “payment -in kind-interest” )
Structure of Mezzanine
Typically Mezzanine financing is structured through three components:
- Cash interest payable to the lender e.g. every six months. Typical cash interest comprises Euribor plus an agreed margin.
- Capitalized interest, which becomes payable at maturity or when the mezzanine debt is prepaid. Such capitalized interest is also known as ‘payment-in-kind-interest’ (PIK-interest).
- The third component consists of warrants or other forms of equity instruments. Warrants typically constitute right to subscribe shares of the company at a point in the future.
Mezzanine loans are generally bullet loans, i.e. payable in one amount at final maturity or at exit, whichever occurs first, and have maturities typically ranging between 5 and 8 years.
The pricing of Mezzanine capital reflects its position in the capital structure. In compensation for the increased risk, due to the weaker position relative to senior lenders, Mezzanine debt investors require a higher return for their investment than senior debt providers.
The subordination is normally executed contractually between the parties, whereby the senior lender and the Mezzanine lender sign an ‘Intercreditor Agreement’ that regulates their relationship. It is usually agreed that all claims of the bank, i.e. loan principal and interest, shall rank ahead of the Mezzanine loan. Both parties make their independent loan agreements but often the document and terms are harmonized. The covenants of the Mezzanine lender are, however, usually less restrictive than those of the senior lenders.
Ilkka Santti is a joint Managing Partner at Armada. Prior to founding Armada in 2010, Ilkka worked for seven years at Armada’s predecessor Eqvitec Partners, most recently as an Investment Director focusing on mezzanine investments. In addition, Ilkka has experience in investment banking and equity research. He holds a M.Sc (Econ) degree in Finance from the Helsinki School of Economics and has an MBA degree from the United States.
+358 20 775 6582
+358 40 700 2876
Mikael Niemi is an Investment Director at Armada. Prior to joining Armada Mikael worked for six years at the investment banking departments of Carnegie Investment Bank and ABN AMRO where he focused on private and public M&A and ECM transactions. Mikael holds a M.Sc. degree in Finance from Hanken School of Economics and a M.Sc. degree in Automation from Helsinki University of Technology.
+358 20 775 6584
+358 50 597 7303
Saija Lehtonen is an Administration Assistant at Armada. Prior to joining Armada, Saija worked at Nordea as a Banking Advisor and prior to that almost 10 years at Exidio as an Administrative and Marketing Assistant. She holds a degree in Business and Administration (QBA) from Vocational Institute Omnia.
+358 20 775 6583
+358 40 703 1694
Jan Wiklund is a joint Managing Partner at Armada. Prior to founding Armada in 2010 and joining its predecessor in 2008, Jan was a Director in the London leveraged finance team at The Royal Bank of Scotland where he arranged both senior and mezzanine buy-out financing. His earlier positions include HSBC, GE Capital and Merrill Lynch. Jan holds a business degree from Uppsala University.
+46 8 546 017 62
+46 70 5514 054
Johan Svaxén is an Investment Director at Armada. Prior to joining Armada, Johan worked for three years at KPMG Corporate Finance in the Debt Advisory team. Prior to KPMG Johan worked for three years in the Leveraged Finance team of Lloyds Banking Group focusing on Nordic LBOs. Johan started his career at PWC Corporate Finance. Johan’s experience includes financing of LBOs, Debt Advisory, M&A, restructurings and valuations. Johan holds a M.Sc. degree in Finance from Jönköping International Business School.
+46 8 546 017 63
+46 70 3606 553
Maxime Pawlowski is an Investment Manager at Armada. Prior to joining Armada, Maxime worked for three years at the European Investment Bank (EIB) in Luxembourg in the growth debt finance division for MidCaps and SMEs. Prior to EIB, Maxime worked at KPMG Corporate Finance and Crédit Agricole CIB in Stockholm and Paris. Maxime is a French national and holds an M.Sc. in Management, Economics and Finance from HEC Paris.
+46 70 2148 116
Jan-Christoph Wöber is an Investment Associate at Armada. Prior to joining Armada, Jan-Christoph worked for two years in the Corporate & Financial Sponsor Coverage at the Royal Bank of Scotland in Stockholm. His earlier employments include Barclays Investment Bank and Mediobanca. Jan-Christoph is a German national and holds a M.Sc. in Finance from the Stockholm School of Economics and a B.Sc. in Economics from Maastricht University.
+46 8 546 017 61
+46 70 019 7400
Industrial Advisory Board Members
Ari was previously a head on Investment Banking at Carnegie Finland and prior to that, from 1990 to 2004, managing director at Citigroup Investment Bank, primarily in London. Ari holds Master of Laws degree from University of Helsinki.
Lauri is a senior executive with extensive industrial and international experience in various fields. Currently he is a Board member in Meyer Turku Shipyard and Inspecta Group. Previously he was the Chairman of Paroc Group, Sponda, Nordic Morning (previously Edita), VR Group (Finnish Railways), Medisize and Tecnomen and a Board member of YIT, LSR Group (St. Petersburg) Russia, Olvi and Vice Chairman of Kemira Grow How.
Earlier Lauri was the Managing Director of Lohja Rudus Group. Lauri holds a M.Sc. (Eng) Machine Construction degree from University of Technology of Helsinki and AMP degree from Harvard Business School. Lauri has Honorary Title 2011, Counsellor of Industries.
Kimmo is a Managing Director of Inspira, provider of advisory services for the municipal sector in various areas of finance. Earlier Kimmo worked as an associate director with local government pension institution Keva. Kimmo holds Master of Laws degree from University of Helsinki and MBA from University of Technology of Helsinki.
Armada Mezzanine Capital
SE-102 40 Stockholm
+46 8 546 017 62
+46 70 5514 054