Nordic Investors in Private Equity – April 2013

by Philippe Alteirac

  • 02 Apr 2013
  • PE

The Nordic region has historically been a significant source of capital for the private equity industry, however with financial markets continuing to struggle, it is interesting to see the level of activity of Nordic investors within the private equity asset class and their investment preferences. Preqin's Investor Intelligence service currently tracks 196 Nordic institutional investors that actively invest in private equity, or are considering doing so, with public pension funds being the most prevalent, accounting for 19% of all investors. Other investor types in the region include private sector pension funds (14%) and insurance companies, which account for 13% of all investors. Of these 196 Nordic investors, 48% have submitted private equity fund searches and mandates over the coming 12 months and will be looking to make new commitments to the asset class in the next year.

Nordic investors (excluding fund of funds managers) have an average current allocation to private equity of 12.7% of total assets, which is above their average long-term target allocation to the asset class of 12%. This is also above the average current allocation of 10% and the average long-term target allocation of 11.4% for the whole limited partner universe (excluding fund of funds managers). Given their larger exposure to private equity as a percentage of their investment portfolios, this indicates that Nordic investors are likely to continue being a significant source of potential capital for private equity fund managers on the road.

When making private equity fund investments, Nordic-based investors have a strong preference for buyout and venture capital vehicles, with 70% and 65% respectively having either invested in these fund types previously or that have a preference for doing so. Forty-four percent have an appetite for fund of funds vehicles, with 31% of investors interested in mezzanine funds. In terms of the regions Nordic investors look to allocate their capital to, there is a strong preference for investing in their locally, with 76% having either previously invested in the Nordic region or having a preference for doing so. Furthermore, 84% of Nordic investors have previously invested in Europe-focused funds. However, many of these investors do look to invest outside of these regions, as 51% of all Nordic investors have an appetite for funds focused on North America.

Nordic-based investors continue to provide a valuable pool of capital to the private equity industry and look likely to remain an important source of capital for the asset class.

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