- A new Finnish private equity fund is seeking success stories in forest and bio-based industries. Its goal is to offer a strong return on investments while mitigating climate change.
- The goal is to offer attractive return profiles for investors but also to advocate climate matters.
- UB is looking for companies that replace plastic and other fossil-based materials with sustainable materials from wood and agricultural raw material side streams.
- This article is part of an article series showcasing Finance Finland member organisations’ concrete actions to promote the green transition.
In a small office on Aleksanterinkatu Street right in the heart of Helsinki, two men are working to make the world a better place.
Matti Lehtipuu and Sakari Saarela are on the lookout for new success stories and new capital to invest in high-growth companies.
The two men are hard-core investment professionals. Both are specialised in the forest industry, with Lehtipuu’s specialism predating even his career in the financial sector.
“I’m a forester by training”, explains Lehtipuu.
Lehtipuu and Saarela have also invested their own capital into the UB Forest Industry Green Growth Fund I (UB FIGG), a private equity fund investing in sustainable and resource efficient forest and bio-based industries. The fund is looking for companies that replace plastic and other fossil-based materials with sustainable materials from wood and agricultural raw material side streams.
Perhaps the most interesting of UB FIGG’s investments is the Germany-based growth company Traceless, which processes agricultural industry plant side streams into fully biodegradable biomaterials to replace the plastic coating in paper and cardboard packaging.
“If paper and cardboard packages have a plastic coating, they cannot be recycled. It is not financially viable to separate the plastic from the rest of the packaging”, Saarela says.
“But the Traceless coating is easy to separate from paper and cardboard. The biodegradable material also decomposes quickly under natural conditions, leaving no trace.”
Established in 2020, the German company’s innovation has captured the attention of the world’s largest paper and cardboard manufacturers. UB FIGG led the company’s final round of financing, raising money for its first production plant.
UB FIGG is the joint venture of the Finnish asset management and investment market expert United Bankers Plc, Lehtipuu, Saarela and two of the most prestigious experts in the field, Rainer Häggblom and David Walker. UB FIGG’s target size is €300 million, and it accepts investments from professional investors.
“We are focused on growth equity investments, but we also strongly advocate climate matters. These two are not incompatible”, Lehtipuu says.
Two investments in Finland
In addition to the German-based Traceless, UB FIGG has invested in two Finnish growth companies, Woodio and Paptic. Woodio makes waterproof solid wood composite products designed to replace ceramic and stone materials in bathroom furniture. Paptic manufactures a fibre-based and recyclable material to replace plastics and other conventional materials in packaging.
“Both Woodio and Paptic are high-growth companies. We want to help scale them up to industrial production through both our investments and our expertise”, says Lehtipuu.
Lehtipuu seems immense possibilities in the forest industry.
“Half of the raw material from felling currently gets used for energy production if we account for the energy generated in pulping.”
“In future, the material can be processed much more efficiently.”
As an example, Lehtipuu cites lignin, a side stream generated from pulp manufacturing.
“Lignin is a highly versatile material. For example, Stora Enso has used it to create a bio-based material that replaces graphitic carbon in batteries.”
Both Lehtipuu and Saarela have carved out their careers largely outside Finland. The opportunity to manage a successful fund while making the world a better place was the draw that got Sakari Saarela to leave the City of London financial hub and move back to Finland.
“This was an opportunity that was simply too good to miss”, Saarela says.
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