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Sofigate chose LähiTapiola as its first private equity investor

Press release 26/10/17

Sofigate announced in August that they are collecting 50 million euros for funding new acquisitions. LähiTapiola was chosen as the first Private equity investor. Sofigate also considered getting listed, but chose to seek growth funding outside the stock exchange as a better alternative at the moment.

Sofigate has conducted several business acquisitions in the Nordics within the last year, and the company is growing at a record speed. With the acquisitions Sofigate’s targets have also transformed: the aim is to be a 150 to 200 million-euro turnover powerhouse with 1200 employees by 2020. This year Sofigate estimates their revenue to reach 70 million euros.

Sofigate is now offering private equity investors the first chance to fund their growth plan. The company is launching its first employee shareholder program at the same time.

“IT companies are currently living in bull market ecstacy, but this alternative path suits Sofigate better right now. Interest from investors has been intensive without listing. We’re growing rapidly and want to move ahead quickly. Quarterly economy of the stock exchange is both too slow and formal for this – and too shortsighted for conducting a massive market transformation. We feel using investors from LähiTapiola and other Finnish institutions as funders guarantees a steady base for employee ownership”, says Sofigate CEO Sami Karkkila.

LähiTapiola is acquiring six percent ownership of Sofigate with their investment. According to LähiTapiola’s Chief Investment Officer Juha Malm, they want to support the growth of promising Finnish companies as a minority shareholder.

“The investment and financing solution we’ve created with Sofigate is a fine example of how we can be a part of accelerating the business and growth for Finnish companies. Sofigate is a fascinating company, especially because the submarket it’s representing is growing quicker than the ICT market as a whole. Sofigate is also run with an entrepreneur spirit, decision-making and processes are clear, their business development is determined and flexible”, Malm says.

Additional investments and acquisitions coming up next Spring

After the current financing rounds are finished, Sofigate will begin negotiations for the additional funding round for next Spring. Sofigate believes that there’ll be a need for additional funding for acquisitions. The personnel will also be offered a chance for additional funding.

“The financial metrics show that Sofigate’s business value may develop favorably. Together with our partner Initia, we’ve created a valuation method which can predict changes in value and act as a starting point for investment negotiations. Our target is a good yet justifiable valuation level, which doesn’t fluctuate like listed stocks”, Sami Karkkila says.