An active year for takeovers in Fondita funds

During the last 24 months the stock market performance has deviated substantially between large caps and small caps, whereas the micro-cap space is by far worst off.

Large caps have dominated the performance with the US megacap tech companies at the top in 2023, boosting SP500 performance to 24 % last year, whereas small caps have run far behind in both Europe and the Nordics.

The performance gap between large caps and micro caps, despite a small cap rebound in the end of 2023, still exceeds 35 % in the Nordic region and is about 30 % in Europe during the last two years.

The huge performance difference which also is visible in valuation, has during the last two years has created a window of opportunity for consolidation in several industries.

Quality companies for grabs at low price and valuation is a desirable avenue to take for a consolidator. During the last 12 months this has been strongly visible in Fondita’s funds.

Given the extreme performance difference even more transactions could have been expected.

Nine takeover bids have taken place across seven of total eight Fondita funds, of which altogether five have taken place in Fondita Finland Micro Cap.

As a consequence, Fondita Finland Micro Cap posted a relatively strong performance in its segment last year with an 11 % return. During the same year OMX Helsinki Cap index declined 2 %.

The takeovers mark a quality stamp as several great companies have been taken over. Fondita Nordic Micro Cap has a track record of at least one takeover per year on average since 2006 at an average premium of 38 %.

The takeovers serve as a nice addition to performance.

Takeovers during last 12 months:

Fondita Finland Micro Cap:
Nordic Lights – lightning products for heavy vehicles- takeover premium 13 %
Rovio- mobile gaming- premium 65 %
Nixu- cyber security consultant- premium 70 %
Musti- pet care- premium 27 %
Efecte- software – premium 90 %

Fondita Nordic Micro Cap:
Musti- pet care – premium 27 %
Swedencare- pet products premium 0 %- (bidder most likely not pursuing to acquire 100 %)

Fondita Nordic Small Cap:
Uponor- floor heating- premium 73 %

Fondita European Micro Cap:
Ergomed- health care- premium 28 %

Fondita Healthcare:
Ergomed- health care- premium 28 %

Fondita Sustainable Europe:
Biokraft – renewables- premium 30 %

Fondita Global Megatrends:
Biokraft-– renewables- premium 30%

Markus Larsson
Fund Manager