Nordic PE must focus on reputation and responsibility, says EQT's von Koch

Reputation and responsible ownership continue to be among the key focus points in the Nordic private equity industry, having been among the major concerns in the region for years.

With more than 140 delegates gathered at the Grand Hotel for the event, Thomas von Koch stressed in his keynote the importance of engaging with the public, politicians and the media, to improve the industry's reputation. Public and political perception of private equity in the Nordic countries has long been patchy in the Nordic countries, and undeservedly so, according to the industry veteran.

Pulling their weight
He expressed astonishment that private equity is still seen as short-sighted and tax evading, despite its contribution to the Swedish society and economy - pointing out that portfolio companies employ equivalent to 4% of the Swedish workforce and their combined turnover is around 8% of Sweden's GDP. In his view, it is not fully understood how important the private equity industry is to the country, by the media, public or by politicians – but that it was also partly self-inflicted, as the industry has not been good at explaining its worth.

Hiding would not create the industry's licence to operate, he said, adding that private equity should work towards being seen as growth capitalists, not the "risk capitalists" and tax evaders they are currently portrayed as.

The most important asset EQT owns is its brand, something that has taken 22 years to build, but also something that can be ruined in a week, von Koch said, explaining why his firm puts a heavy focus investing and acting responsibly. He noted that Nordic private equity could take credit for a significant portion of economic and wealth growth in Sweden, as well as being a driver for change, but that the industry has changed since its breakthrough in the mid-90s.

From acting in the shadows, the industry is now in the public spotlight more than ever, as the industry became an important part in Swedish and Nordic society, and found itself increasingly in the eye of regulators and politicians.

Golden goose
Ultimately though, the sizable amount of capital coming into the industry at the moment is not the result of being good or responsible investors, but rather Nordic private equity's returns, von Koch said, suggesting the asset class had outperformed most others in the past two decades.

The Nordic buyout industry remains a highly competitive space, particularly in the mid-market segment and up, having been a seller's market for some time, he said. Von Koch expects competition to grow and eventually force some players out of the market, as they fail to cope with the pressure and continual adaptation needed to survive. He said there was not a deal his firm did today in which they could leave negotiations without bleeding noses from the battle for high-quality assets.

However, he concluded that the industry has an opportunity going forward to show its strengths, linked to more jobs, innovation and growth.

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