Nordic market awakes from slumber

Greg Gille
10 July 2017

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After a remarkably slow start to the year, it seems as though the Nordic buyout market is showing signs of effervescence in the run-up to the summer break. Greg Gille reports

It might be early days to call it a full-blown revival yet, but the Scandinavian buyout market certainly stirred considerably in June. Throughout the course of the month, unquote" recorded 12 buyouts reaching an aggregate value of €6.7bn – a marked uptick from the five transactions seen in May, for a total EV in the region of €617m.

In fact, June was the busiest month of H1 on the buyout front. March came close with 11 deals on record (though with a much lower aggregate value), and buyout activity was lacklustre for most of Q1 and Q2: unquote" recorded only four buyouts in April, and three in January. June's activity was much more in line with the number of buyouts seen in December last year (13 deals worth a total of €1.5bn), which made the Q1 slump all the more noticeable in the region.

The sudden value spike predictably came courtesy of the most high-profile deal inked in June: KKR agreed to sell its entire stake in Norwegian enterprise software business Visma to a consortium of investors led by HgCapital, in a deal valuing the business at NOK 45bn. A source close to the situation told unquote" that the deal valued Visma at 22.2x its last-12-month EBITDA. Cinven also sold 40% of its stake in the business via the transaction, with the consortium of acquirers including Montagu Private Equity, Intermediate Capital Group (ICG) and Singaporean sovereign wealth fund GIC. This marked the largest buyout by EV in the region in more than a decade.

Adelis was not affected by the recent tax rulings and we believe that, given our Swedish onshore structure, our own tax environment is quite predictable as well as reasonable. For other firms it has been extremely painful" – Adalbjörn Stefansson, Adelis

Meanwhile, Advent International agreed to acquire Danish plastic food packaging company Faerch Plast from EQT Partners. Financial details of the transaction remain undisclosed, though Danish media reports suggest that the purchase price was around DKK 7bn. A source familiar with the situation said a group of Nordic banks are working with two larger European banks to provide 5.5-6x turns of leverage for the transaction. It is believed the deal will be backed by a €570m debt facility made up of first and second lien financing.

Elsewhere, CVC Capital Partners agreed to acquire Swedish online travel agent Etraveli from trade vendor ProSiebenSat.1 in a deal giving the business an enterprise value of €508m, or around 14x its adjusted EBITDA. Other potential buyers, including Blackstone and an unnamed Nordic bidder, were also involved in the auction process, a source close to the situation told unquote" sister publication Debtwire.

Mid-market dry powder
GPs targeting the Nordic countries have made a push to get deals over the line before the traditional summer break, which usually brings the region to a near-standstill between mid-July and August. It remains to be seen whether activity can pick up where it left off in September, especially since local mid-market players have enjoyed success on the fundraising trail in the first half of the year.

Summa Equity, a Nordic buyout firm founded by Altor and Nordic Capital veterans, closed its debut fund on its SEK 4.5bn hard-cap a year after the firm was founded. More recently, Swedish buyout house Procuritas held a final close for its sixth fund, Procuritas Capital Investors VI, on its €318m hard-cap. Announced in September 2016, the vehicle launched with a €300m target. After seven months on the road, the fund hit its €318m hard-cap and will commence its investment phase. And the speedy fundraise achieved by Adelis in Q2 shows investors are still keen to back local managers – despite the potential dark clouds accumulating overhead in the wake of the shock carry tax rulings in Sweden.

"We did get some questions on this topic from prospective LPs so there was clearly some level of concern," Adalbjörn Stefansson, Adelis investor relations partner told unquote". "Adelis was not affected by the recent tax rulings and we believe that, given our Swedish onshore structure, our own tax environment is quite predictable as well as reasonable. For other firms it has been extremely painful. It is difficult to predict what impact this will have. If you are already present in other jurisdictions, shifting your operations away from Sweden becomes more of an option. Perhaps this will be contemplated among some of the firms at the larger end that are unable or not willing to adapt their fund structures."