CEO’s review Q2/2024
In the second quarter of 2024, we continued to promote our strategy that focuses on private asset management and direct investments. We advanced projects broadly in all business units. In addition, our investment organisation continued to assess direct investments.
Taaleri Group’s continuing earnings grew by 3% to EUR 10.1 million in the second quarter, especially due to the development of the renewable energy business. Income was EUR 11.9 million, down from the corresponding period as a result of lower returns on investment operations. The operating profit margin was 36.9%.
In the Private Asset Management segment, continuing earnings grew by 7% to EUR 6.1 million. Operating profit fell from the corresponding period and was EUR 0.3 million. The decrease in operating profit was due to EUR 8.3 million in capital gains from the sale of the renewable energy project development portfolio in the corresponding period and EUR 1.5 million in performance fees recognised in the real estate business in the corresponding period. No corresponding capital gains or performance fees were recognised during the quarter ended. Without these items, the segment’s operating profit was stronger than in the corresponding period.
The renewable energy business continued the fundraising for Taaleri SolarWind III Fund and the active development of the fund’s project development portfolio. Several investors are currently conducting due diligence on the fund, and the amount of committed capital is expected to grow towards the end of the year. Our goal is to raise EUR 700 million for the fund. The Taaleri SolarWind II Fund focused on the high-quality and efficient operation of the wind and solar farms already in production. Preparations to exit the Taaleri Wind II and Taaleri Wind III Funds continued during the second quarter.
The bioindustry business continued preparations for the new venture capital fund and the evaluation of its investor base. The fund’s fundraising will start in the early autumn after the anchor investors have been confirmed. The Taaleri Bioindustry I Fund promoted its strategy as planned by developing its portfolio companies and assessing potential new investments. The fund made its fourth investment in eniferBio, a company producing fungi-based mycoprotein, in the second quarter of the year. The construction work of the torrefied biomass plant in Joensuu is in the final stages, and we expect it to start production at the end of the year. In addition, we promoted the internationalisation of the bioindustry business by establishing a project development company in Canada to explore the opportunity to start production of torrefied biomass. During the review period, Taaleri also made an add-on investment in its associated company Fintoil by participating in the company’s share issue.
The real estate business continued to implement its new strategy in the second quarter of the year. In addition to planning a new closed-end fund, we are strengthening the team through new recruitments. In accordance with the strategy, the focus of operations will shift more strongly to the structuring of new investment products, as well as to investment activities. We aim to develop and launch new products this year. The market has been challenging but may offer favourable opportunities in the future.
Garantia’s insurance service result in the second quarter was at level with the corresponding period at EUR 3.5 million due to the sluggish development of the housing market. The combined ratio, which measures the profitability of insurance operations, improved to 26.5%. Garantia’s net income from investment operations was EUR 1.4 million and the return on investment at fair value was 1.6% in the second quarter, mainly due to the favourable market development.
We continued to systematically advance our strategy during the second quarter. The operating environment is more positive than early in the year, as the interest rate environment is stabilising, and the transaction market shows subtle signs of picking up. While the fundraising environment continues to be challenging, signals at fundraising meetings have been positive. As an established player and thanks to our new products, we are in a good position and confident in our ability to capitalise on the next growth phase in our industry as the outlook cautiously improves.