Nordic-Focused Private Equity Funds an Attractive Opportunity for North America-Based LPs

by Alexander Nikas

  • 14 Aug 2014
  • PE

The Nordic countries of Norway, Sweden, Denmark, Finland, Greenland and Iceland have long been the subject of intense study and interest by economists hoping to understand why this region of the world has become an economic powerhouse. Additionally, foreign investors are also drawn to this region of the world as they have found the Nordic countries to be business friendly with growing industries such as telecommunications, infrastructure, and healthcare technology offering strong investment opportunities and the potential for gainful returns. 

Preqin’s Investor Intelligence online service currently tracks 359 North America-based investors who either have a preference for or have previously committed to funds focused on the Nordic countries, these investors account for 12% of North American LPs. The most prevalent investor types within this pool are public pension funds (24%), private pension funds (20%) and foundations (16%). Overall, these investors have over $11.5tn of assets under management and further analysis reveals that these LPs are on average slightly below their target allocation to private equity of 11.4%, with an average allocation of 10.8%.   

The strong economy of the Nordic region is a direct result of the high productivity of these countries, their technological innovations, and the transparency of their governments. It is for these reasons that large institutional investors, such as the Washington State Investment Board, have made significant investments with Nordic-focused GPs. The large public pension plan, with $16.6bn allocated to private equity, has invested in a succession of six vehicles raised by Nordic Capital, including Nordic Capital Fund VIII, a EUR 3.5 billion buyout fund focused on the healthcare industry. 

With no sign of slowing growth in the technology and healthcare industries, plus an impressive economic environment in the Nordic region, it is likely that institutional investors will continue to target this region of the world in the future.

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