Good afternoon, and welcome to Taaleri's result presentation for the third quarter of 2026. My name is Linda Tierala, and I am heading Investor Relations here at Taaleri. Presenting with me today are our CEO, Ilkka Laurila, and our CFO, Lauri Lipsanen. There will also be a Q&A session at the end of the presentation. You may submit your questions through the chat function on the webcast platform at any time. With that, I will hand over to Ilkka.
Thank you, Linda. Good afternoon to you all. Time flies, and it is again time to go through our latest operational development as well as the financial numbers. Starting with the highlights. Overall, I would say that the Q3 development was good. Our continuing earnings grew at 18%, although that was mainly driven by the success fee coming from the Fintoil financing arrangement, but still a good, stable development on continuing earnings. Secondly, Garantia continues to have an excellent performance. The combined ratio was on an excellent level. Again, the residential mortgage guarantee utilization rate increased by more than 18%, and the guarantee insurance portfolio grew up to EUR 1.9 billion. In addition to those, we also completed our investments to Fintoil. Obviously, that was published already some time ago, but that was completed during the third quarter through the EUR 25 million investment in there.
The rest EUR 5 million is then dependent on certain conditions to be fulfilled. This was part of the EUR 105 million total financing round together, which we carried out with the Norwegian private equity house, HitecVision. Our Uusiutuva energia business continued their project implementation according to their plan. Both Čibuk 2 in Serbia as well as Hallanvahti Solar Project here in Finland are now on an operational phase. In addition to that, fund made an investment decision in Estonia concerning the battery storage project. Our new businesses, you could say, so the VC and PE sectors will further broaden our private asset management offering. In our venture capital business, NSI made five follow-on investments during the quarter, including their contribution to Kasvu Therapeutics as part of the EUR 30 million financing round, which is one of the biggest rounds in life science in Finland.
Then we published that we will launch private credit strategy in November as the team will join. Finally, the preparation to raise the next generation growth further continued during the quarter, so that we are preparing SolarWind IV as well as the next Nordic Science Investments venture fund preparation. Then, if we take a bit closer look at the strategic priorities which we had for this year and take a look at how we have been able to execute those, the first was capture Garantia's growth potential, and that is progressing in many fronts. The utilization rate continues to grow in mortgage guarantees. Insurance service result is improving. In corporate side, both the international non-payment insurance market is active as well as the corporate guarantee demand has strengthened during the quarter.
Then in private asset management, we have stated that we are expanding our private asset management business. Obviously, both these Nordic Science Investments acquisition as well as the private credit strategy launch will support our target on that area. Finally, gaining attractive returns on the development capital. We have made that follow-on investment in Fintoil being second largest capital allocation decision since Garantia acquisition during Taaleri's history, as well as we made a follow-on investment on Ren-Gas, and we will later take a bit closer look on the achievements on that business as well. Then, as said, we are launching a private credit strategy in November that will focus on Nordic SMEs, providing for them the flexible and long-term financing. Team consist of four members at this stage. Marjo Koivisto will be a Managing Director of the team, having a background in Danske Bank, Aktia, and P Capital Partners.
Helen Taflin also have a similar background from the P Capital Partners, as well as Christian Reiner, who is our Senior Advisor. All these three key members have worked with the same deals in the private P Capital Partners. Helen Taflin has also experience on wider VC and PE sectors in Almi Invest GreenTech, as well as the compounder called Lagercrantz Group. Christian Reiner used to be a Managing Director, former Managing Director of P Capital Partners, and then supported by Antti Salmela, who is our Investment Director with extensive and long track record on mid-market private equity. Then we also published that we are strengthening our executive management team with two members.
Antti Salmela, a familiar face already for many of you through the Fintoil and Ren-Gas deals previously, has almost 20 years experience in private equity and is responsible for Taaleri's direct investments, which after now Fintoil Investments grew almost up to EUR 100 million. It starts to be meaningful part of our total balance sheet. So together with that and together with extensive background in private equity, will bring his contribution to the management team. Linda Tierala, which is heading our Investor Relations, Communication and Sustainability, has a long background in private equity sector from many companies and brings her strategic mindset also to the usage of executive management team. Then key figures, I will focus on then to the lower section of the slide. LTM numbers. Continuing earnings grew at 10% on an LTM basis.
Revenue slightly declining as well as the operating profit and key kind of driver there is the fair value changes for the previous period concerning the Truscott Gilliland East Wind Farm as well as certain SolarWind III related management fees, which were compiled in a previous period. Operating profit from continuing earnings grew at 16.6%. In total, investments at fair value amounts now already EUR 257 million almost. Then going to different segments, starting with Garantia. Like visible, the insurance service result grew at 2.2% from the comparison period, although the insurance revenue was actually slightly down, but that is due to the fact that we discontinued the rental guarantee business in 2025, and that has an impact on the numbers, so that if we would exclude that, also the insurance revenue would have increased on a year-on-year basis.
Like said, market share in residential mortgage guarantees increased, and the utilization rate is growing compared to the comparison period and activity on the Nordic non-payment insurance market stays on a high level. Profitability remained on a very strong level, so combined ratio 25.7%. If you take a look at the right-hand side, the numbers, insurance service result EUR 3.5 million, so on a similar level compared to previous period and the total net income from the investment operations, minus EUR 1.4 million. That is explained by the interest rate fluctuations during the quarter, which had an impact for the net investment income in the other comprehensive income part of the P&L. Still, growth in premiums continued to be on an LTM basis at 12.5%. Then if we take a look at the Garantia insurance portfolio that grew now up to EUR 1.9 billion.
On the other hand, investment portfolio slightly declining. Key driver there is the dividend distribution, which was then distributed during the third quarter. Then followed by private asset management, starting with the renewable energy. Continuing earnings increased 4.1%, following by management fees, which were related to SolarWind III final closing in December. Activities continued in the investment side, like already mentioned earlier. Then we made a small write-down for the unrealized performance fees down to EUR 13.6 million due to change the return expectations, which are now based on the fund's updated valuation. Exit processes further continues on many of the funds which are at the end of their life cycle. From the numbers, you can see that as a result of that small write-down to operating profit slightly declined from EUR 3.1 million to EUR 1.6 million. The AUM is still on a same EUR 1.8 billion level.
Then other private asset management business. In bio industry, the performance fee of EUR 1.2 million related to that Taaleri Biorefinery JV was recognized during the quarter. In real estate, lots of ongoing activities in different areas. Constructions activity, although that remained quite limited, and the transaction market is subdued. Still our activity is on a high level and hopefully we are able to then publish later some more news and activities on that area as well. Venture capital continuing earnings grew due to the fact that the Nordic Science Investments is now consolidated into the numbers. They made those five follow-on investments and participated in the EUR 30 million financing round of Kasvu Therapeutics. As a result of that performance fee recognition to operating profit in other private asset management business grew up to EUR 1.2 billion. AUM is that EUR 0.9 billion. Then finally, investments.
We made a positive fair value change in connection with the Fintoil as part of the latest financing round at the total value of that round was that EUR 105 million. There was also a negative fair value changes, which is not seen on the P&L due to the accounting policies related to Turun Toriparkki. Maybe worth noting is that there was a quite significant fair value change in Truscott Gilliland East Wind Farm in the comparison period. So overall that had a obviously major impact for the numbers. As we have stated, the fair value changes are key drivers on the P&L in this segment. So in total, fair value of our investment portfolio is now that EUR 95 million. Here you can see the split between the different investment shortly.
Maturity now comprises of these development capital investments, which account almost 80% already of the total portfolio at fair value. Maybe highlighting still, if you take a look at the development of this, the development capital investments highlighting two investments here in Toriparkki. Positive development continued, so both from the operational perspective, meaning the volume increase as well as the results perspective, EBITDA clearly increasing during this financial year and the utilization rate in that this is continuously increasing. Then on the other hand, Ren-Gas, during this period, they made an agreement with avanca/Alternoil, which was valued of EUR 1 billion over its term, and they were also able to increase the framework financing mandate from the European Investment Bank up to EUR 680 million.
Supported by the announced technology partners as well as the power purchase agreement that all supports and let's say takes the company closer and closer to final investment decision. Which hopefully the company's able to achieve in the near future. With that, I will hand over to our CFO, Lauri Lipsanen, who will go through our financial development during the quarter.
Thank you, Ilkka. Hello, my name is Lauri Lipsanen, Taaleri Group CFO, and today I present Q3 financials to you. In the third quarter of this year, revenue was EUR 17 million and operating profit EUR 9.4 million. Garantia's insurance service result remained stable compared to the previous year, while other continuing earnings increased by 22%, driven by the Fintoil closing related success fee of EUR 1.6 million and the increased SolarWind III related fee base. Other income, mainly comprising pass-through items, declined by EUR 1.7 million. Performance fees were positive by EUR 0.6 million as the realized performance fee of EUR 1.2 million from the exit of Taaleri Biorefinery JV was partially offset by the Taaleri Wind II and III related performance fee write-downs amounting to EUR 0.6 million. No performance fees were recognized last year.
The performance fee receivables recognized in the balance sheet are based on the fund's updated valuations, and their realization in full is subject to increased risk as exits are delayed. Net income from investment operations were driven by positive fair value changes in Fintoil, and despite Garantia's total net investment income was negative in Q3, related investment income presented within operating profit was positive by EUR 1.5 million. When comparing year-to-date operating profit to the previous year, we can see that operating profit declined by EUR 4 million, despite Garantia's net result from insurance has increased by 14% or EUR 1.2 million. The overall decline has been due to couple of things. First of all, performance fee write-downs of EUR 2.3 million, partially offset by the realized performance fees of EUR 1.2 million. As stated, last year, no performance fees were recognized.
Secondly, net income from investment operations has been mostly driven by Garantia, of which investment income has been EUR 4.3 million higher than last year. However, total investment income declined by EUR 2.5 million, mainly due to the fact that investment segment's invested income this year has been negative due to the lack of material positive fair value changes, and as well as Joensuu Biocoal related write-down of EUR 0.9 million took place in the first quarter this year. In addition, the comparison period was positively impacted by the EUR 6.4 million positive fair value change of a wind farm investment in Texas. Thirdly, expenses excluding billed expenses have increased by EUR 2.5 million, mainly due to Biocoal related write-downs of EUR 0.8 million impacting cost base. We acquired Nordic Science Investments in April, and the related consolidation effect in terms of expenses is EUR 500,000.
In addition, in order to execute our strategy, we have expanded our sales team. As can be seen from the left-hand chart, quarterly continuing earnings have been fairly stable. However, total revenue has been fluctuating. The fluctuation has been mostly driven by net investment income, but also recently, changes in performance fees. This quarterly revenue fluctuation has resulted in similar fluctuation in terms of operating profit. You can see the same numbers on an LTM basis, and you can see that the composition of revenue is more balanced. Continuing earnings have been growing by 10% on an LTM basis, whereas other than continuing earnings have been fluctuating. For instance, when we look at Q3 2025 LTM numbers, those were positively impacted by the renewable energy development portfolio gains and performance fee recognized for the last quarter of 2024.
In contrast, most of this recognized performance fee was written down in Q2 2026. Also, no new major positive fair value changes has been recognized since Q3 2025, explaining a large part of the recent drop in other- than- continuing earnings. As visible on the right-hand side, you can see that operating profit from continuing earnings have been developing positively trend-wise. Then a recap of Garantia's financials. As stated by Ilkka, the weak development of the Finnish housing market has continued. On the other hand, Garantia's insurance revenue has increased by 4% on a last 12-month basis, and this has been mainly driven by the increased market share in residential mortgage guarantees, and the insurance service expenses have declined slightly.
As a result, net insurance result has developed positively, which together with the positive development of Garantia's net investment income, have increased Garantia's total operating profit above EUR 24 million on an LTM basis. However, when considering also the investment income reported below operating profit, the LTM development has been modest due to the recently increased interest rates, and it's visible here within the yellow color within other comprehensive income items. This is how the reported profit looks like. Now you can see that the underlying performance has been stronger. Cash-based premiums received, which are colored with black here, increased by 12.5% on an LTM basis, and that's been driven by the strengthened market position and increase in sales volumes in residence and mortgage guarantees. However, the growth in terms of insurance revenue has been modest due to the fact that IFRS accounting principles cause delays in revenue recognition.
On the right-hand side, it can be seen that the combined annual ratio has continued to be strong, and claims ratio was low. It should be highlighted that the year-to-date expense ratio was impacted by 3 percentage points related to the strategy development cost of roughly EUR 400,000, which were booked during Q2 this year. You can see that Garantia's return on equity at fair value has continued to be an excellent level, and solvency ratio has remained strong. On the other hand, basic own funds have declined slightly from the 2025 year-end. This is mainly because of the fact that estimated dividend payments from the financial year 2026 have been deducted from the basic own funds. Basic own funds.
Garantia paid the second dividend tranche of EUR 9 million to the parent company, Taaleri Plc, in September, meaning that the full dividend of EUR 80 million from the financial year 2025 has been now paid. A short outlook on private asset management. As visible, continuing earnings grew by EUR 3.6 million on a last 12-month basis, mainly driven by the SolarWind III final closing that took place in Q4 2025. Continuing earnings on an LTM basis have been fluctuating slightly, mainly because of the fact that there have been retrospective management fee bookings relating to SolarWind III. Other than continuing earnings have recently declined on a 12-month basis, mostly driven by the performance fee write-downs in Q2 and Q3 and fluctuation in inbuilt expenses.
When looking at the chart on the right, it is visible that both LTM operating profit and LTM operating margin have been declining until Q2 2026, and recently the trend has reversed. There are two main drivers explaining the decline profitability. In Q3 2025, as stated, it was impacted by the earlier recognized performance fees relating to SolarWind I, whereas most of this performance fee was written off in Q2 this year. Secondly, LTM impact of retrospective fees booked relating to SolarWind III have been materially lower in Q2 and Q3 this year compared to the other LTM periods visible in this chart. What comes to investment segment, the fair value of its investment portfolio increased slightly by EUR 0.3 million during the third quarter of this year.
This was largely driven by the already mentioned positive fair value change of Fintoil and partially offset by Turun Toriparkki's fair value change. Please note that Turun Toriparkki's fair value is not having an impact on P&L. Revenue and EBITDA have been developing positively in Turun Toriparkki. However, yield expectations have been updated, resulting in a negative fair value change. The executed add-on investments of EUR 25 million to Fintoil, and final investment tranche payment of EUR 3 million to Ren-Gas, were the main drivers behind the total fair value increase of EUR 28 million from the previous quarter. As a reminder, when looking at this table, fair value may deviate from the balance sheet value depending on the base of accounting. For Turun Toriparkki, the fair value is currently EUR 50 million, whereas the book value is EUR 10.6 million.
At last, a short recap regarding our balance sheet. Both balance sheet and equity ratio have remained strong. Total assets amounted to EUR 328 million, and equity ratio to 67%. Investments amounted to EUR 250 million, of which Garantia's portfolio accounted for 64%, development capital portfolio 28%, and the remaining part of roughly 8% is related to the fund and other direct investments. Net cash position turned to net debt position of EUR 5 million as interest-bearing liabilities increased from less than a million to EUR 18.5 million as part of the Fintoil add-on investment was partially financed with the term loan. Investments deducted by net debt amount to EUR 245 million, exceeding our market cap of EUR 203 million as per the end of Q3.
It should be noted that on top of the investments generating operating cash flow, our LTM operating profit from continuing earnings, which is not related to our investment portfolio, is EUR 12.7 million. It is good to highlight that Taaleri distributed the first dividend tranche of EUR 4.2 million, or EUR 0.15 in early April, and the second tranche, also the same size, was paid in October. Ilkka will present an outlook for 2026.
Thank you, Lauri. Our outlook, we have kept the same, so no changes in that area. Basically, in private asset management, renewable energy business, continuing earnings expected to decline compared to previous period due to the subsequent management fees, which were recognized in 2025 in connection with the SolarWind III fund. In addition, planned exits from funds that are at the end of their life cycle obviously will have an impact for the management fee base as well. Operating profit will depend, among other factors, result of those exits. On the other private asset management business, obviously, as we can see, we have made lots of investments for the new products, and therefore we still expect the operating profit in 2026 to remain on a negative level.
On Garantia, insurance revenue is expected to grow in 2026 and the profitability of the insurance operation expected to remain at a stable level. The returns on the Garantia's investment operations is obviously very much dependent on how the interest rate environment and equity markets will move during the year. Our investment segment operating profit is very much dependent on the fair value changes and timing of possible exits. The other group expense level is expected to remain approximately on the level of the previous periods. With that, no changes in the outlook. I think the overall, you can summarize that the Q3 result shows good operational development in many strategic fronts and the underlying development in our numbers has been good as well. I think that we have time to kick off with the Q&A.
Thank you, Ilkka, and thank you, Lauri, for the presentations. We now open the floor for Q&A, and we take questions both from the audience here and from those of you joining us online. As a reminder, you may submit your questions through the webcast platform at any time during the Q&A. The first question comes from Sauli Vilén from Inderes. Please go ahead.
Yes, thank you. Good afternoon. About the performance fees on the older wind funds. If I recall correctly, historically, you have had some kind of buffers with the performance fees accounting. Now when you are in the negotiation phase regarding the exits, I would assume that the 13.6 number reflects the current status of the negotiations on the exits. Is this a correct assumption?
Well, it reflects the information that is available for the fund management. Now, like I said, we move to the NAV when it comes to the valuation. That maybe should not be linked to the exit process itself, but it is the information that is available for the fund management at the moment.
I am not sure. Are you going to comment this? Let us try. Can you give us any update on the exit process? I think in Q2, in August, you kind of mentioned that you would try to get the exits done during 2026.
Yes. That is still our view, but obviously, like I said, during the quarter, the exit processes have progressed quite well, but still it is our job to maximize the end result for the fund investors and not to be fixed with a certain date or calendar day per se. In that sense, the process is continuing and it has progressed. Our view with the exit timing has remained the same.
About overall exit outlook in the renewable energy on the larger scale. Obviously, you have a ton of exit processes going on there. Has anything changed during the last quarter about the exit environment? Obviously, a lot is happening in the world at the moment.
Yes. Lots of things have changed, you could say, but it really depends on the market. We are operating in 14 countries, and I would say that every country and every market has its own circumstances. That would maybe be a one-hour debate on the different power markets in different areas. There is, let us say, continuous changes with the power markets, and it is continually developing in different areas of the Europe as well as the Texas. Obviously, like we all know and it is easy to follow the news, there are lots of activity and lots of things that are happening, positive and negative. Interest rates are increasing, then there are lots of investments announcement in certain areas, not so much on the other areas.
All that will have an impact for the certain markets and that is what our team obviously is following quite closely, and then timing the exit processes based on those market fluctuations.
Then about your balance sheet and the debt side there. You obviously have a ton of credit facilities you could lever up notably with those facilities if you would want to. Historically, you haven't. Taaleri has been very conservative with this balance sheet and use of debt. But let's just hypothetically assume that something really interesting would come up. Would you be comfortable on using, let's say, all of the facilities you have to lever up your balance sheet?
Possibly yes, subject to the opportunities, of course. But yeah. Yes. That's why we have those available facilities.
Then on the fundraising side still, can you give us an update on the SolarWind IV timetable? Also now you mentioned the Nordic Science Investments second fund. So timetable on those would be appreciated.
Yeah. I would say obviously we don't publish the launch dates for different funds, but we will publish them when the fundraising has progressed. Let's put it that way, that during the first half of the next year, we will have most likely three funds in a fundraising, SolarWind IV, Nordic Science Investments, and private credit. That's a likely situation during the first half of the year. But we don't publish any specific dates when we are launching the certain strategy into the market.
Okay, thanks. That is all from me.
Thank you. The next question comes from Patrick Campbell from Nordea.
Hi, it is Patrick from Nordea. Just maybe going back to Sauli's question and to the new funds. You recently announced the new additions to the private credit side. Could you perhaps give us a timeline of the new fund perhaps next year, but what could the target size be? I know you mentioned already NSI and the other fund as well, but I would be interested on the private credit side specifically.
Like I said, when it comes to the timing, we are most likely going to the market during the first half of next year. When it comes to the sizing, we have stated that we are targeting the three-digit million number, but have not yet specified the exact target size of the fund.
All right. Perfect. Thank you. Then maybe just going back to the performance fees and the write-downs on the wind side. Do you see any further risks for write-downs on the wind side? If not, could you justify why not?
Obviously, we are not commenting any further write-downs because the numbers that we have in our books is the number or the view that the fund manager has at the moment. But obviously, like we stated, if the processes are delayed, that typically increases the further risk of the further write-downs. That comes with, let's say, in many situations, but that's what we've stated. I think that at the moment, there's nothing further to comment on that front.
All right. Thank you.
Thank you. We have some questions also online. There's a question on Garantia and the insurance revenue. Why was Garantia's insurance revenue flat year-over-year in the third quarter if the business developed well?
Yeah, there's maybe two things that needs to be taken into account. First of all is that, like I said, we discontinued the rental guarantee business during 2025, which has an impact for the comparison period, but smaller impact for this year's numbers. The underlying business has continued to increase. The second thing is that obviously the revenue includes both corporate and the mortgage loans. If the average length of the contract period lengthens, then obviously the part that is recognized on the P&L will be smaller. Even though the cash flow is improving, portfolio is growing, if the average contract length is increasing, that will have a short-term impact for the P&L.
Thank you. There's a question on the impact of the data center investments on Taaleri. There's been quite a few of these announced in Finland now recently. Will these have any impact on Taaleri's results?
First of all, it's good maybe to remind you all that Taaleri is not producing any electricity. Taaleri owns funds that owns wind farms and solar parks and so on and so forth, which then produce and participate in the energy market. If you think about the fund and the asset performance in there, obviously, if the electricity demand will increase, that will most likely further have an impact for the electricity prices going forward.
Therefore, at the exit phase, buyers' willingness to pay on the assets, and then on the other hand, the cash flow that the operational asset is able to generate during the ownership. So in that sense, yes. But obviously, I think we have all, and those institution that prepare those electricity market forecasts, have already expected lots of investments in data center in Finland. Now when these investments have been published, this is just, let's say, tick the box for those forecast institutions that now this will happen in the near future.
Thank you. We have some further questions from Sauli Vilén.
Yes. Thank you. About Fintoil, you mentioned that you are currently planning on the new facility on the current site. Can you give us any ballpark figure how big investment this is?
Well, that's Fintoil's thing to then publish when they are ready to do that investment. At this stage, there's nothing to comment on that area, but hopefully we are able soon to have more information on that area.
Okay, thanks. That's all for me.
Do we have any further questions, either from the audience or from online? As there are no further questions, this concludes Taaleri's third quarter 2026 result presentation. Thank you for joining us today, and wishing you a very nice day.
Thank you.
Thank you.