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Nordic-Focused Private Equity Funds – May 2014

by Christopher Hardy

  • 21 May 2014
  • PE

The Nordic region has always performed well since private equity started to take off in the region in the early 2000s. The 221 private equity firms based in Denmark, Sweden, Norway, Finland and Iceland also represent a large percentage of the European activity in private equity. This is, in part, helped by the well-known large buyout firms including 3i, EQT and Nordic Capital. 

This growth in the Nordic region has attracted capital from all over the globe and has lead to the region’s status as a top private equity destination. This was confirmed in 2013 with figures posted for the largest amount of capital accumulated to invest in the area, as part of a wider geographic focus, since 2008, and the second largest amount of capital garnered on record. According to Preqin’s Funds in Market online service, in 2013 over €16bn was raised by just 36 funds that invest in the Nordic region while considering other geographies as well. This surpasses the €10bn raised in 2011 by the same number of funds with the same geographic focus and is only just surpassed by the 2008 figure, when 58 funds raised €18bn in capital commitments. The progress of the Nordic-focused space has seemingly continued into 2014, with 4 funds having closed so far this year on almost €2.5bn of equity; already representing 49% of the capital raised in the whole of 2012 in under two quarters of 2014. 

Nordic-focused private equity has regularly attracted the big players in the industry, and much of the capital raised in 2013 was due to the five largest funds to close that year. These five funds made up 71% of the total capital accumulated in 2013. In fact, only ten funds are currently in market as first time funds seeking to invest in the Nordic region as part of a wider geographical focus. The skew towards the larger funds is apparent when examining the average fund size of the constituent vehicles. In 2013, the average size of these funds rose to a huge €500mn and has been consistently high throughout the 2000s, the lowest average being in 2010 at €380mn. 

Perhaps the high average is a result of a relatively small venture capital industry in the region compared to opportunities for large buyout firms. In 2013, buyout funds garnered just under €13bn to invest in the Nordic area as part of a wider geographic focus, compared to just €290mn raised by venture capital funds. This dominance of large funds looks to continue; ten buyout funds are currently in market targeting a total of under €12bn, including PAI Europe VI, which is targeting €3bn and has closed on €1.4bn of this target in a first close earlier this year. In contrast, venture capital funds focusing on the Nordic area among other geographies are only hoping to garner under a billion.

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