Recently, both the Danish and Swedish central banks lowered their interest rates into negative territory in an attempt to drive down the value of their currencies. This should create more competition for deals in the Nordic private equity market and push up asset prices, due to lower rates for acquisition finance. In turn, this will likely affect investors, who will be keen to commit to Nordic-focused funds as they try to tap in to the potentially higher returns. This blog will take a look at the overall landscape of Nordic-based private equity firms.
Preqin’s Fund Manager Profiles database shows that there are 264 private equity firms based in the Nordic region, which incorporates Denmark, Norway, Finland, Sweden, Iceland and Greenland. These firms have raised €66.2bn in aggregate capital commitments over the last 10 years and have an estimated $120mn in dry powder available to commit. Sweden houses the largest amount of firms in the Nordic region with 101, followed by Finland (58), Denmark (49), Norway (43), Iceland (12) and Greenland, whose sole representative is Greenland Venture.
Sweden is home to three of the top four private equity fund managers in terms of aggregate capital raised over the last 10 years. The firm that has raised the most amount of capital in this time frame is EQT, with €12.5bn. The firm is headquartered in Sweden and has offices in Northern and Eastern Europe, Asia and the US. EQT has four investment strategies – equity, mid-market, infrastructure and credit. They are currently raising EQT VII, a fund with a €5bn target that focuses on deploying capital in the Nordic region and German-speaking Europe. EQT alone has raised 19% of all capital accumulated over the last decade by Nordic-based private equity firms.
ATP Private Equity Partners, the private equity arm of ATP Pension (the Danish Labour Market Supplementary Pension Scheme) and the manager of the pension's private equity investments, has raised the most amount of capital by Denmark-based private equity firms, with €5.2bn raised in the last 10 years. The pension fund has recently made headline news after selling its stake in Altor IV on the secondaries market after OW Bunker, one of its portfolio companies, was declared bankrupt. The largest Norway-based firm is HitecVision, while in Finland it is CapMan. Framtakssjodur Islands is the largest Iceland-based private equity firm.
In July 2013, there were only 197 Nordic-based private equity managers listed on Preqin’s Fund Manager Profiles database. The recent increase in the number of Nordic-based fund managers is indicative of the competition in the area and it is likely that low interest rates creating cheaper deals will lead to a continuation of this, not just for firms based in the Nordic region but also across the globe.