Deal in Focus: IK’s Attendo finds happy home on Stockholm exchange

Sweden-headquartered care provider Attendo listed on Nasdaq OMX Stockholm on 30 November, in an IPO valuing the business at SEK 8bn. The company saw its share price surge by 40% by the end of its first day of trading, from an introductory price of SEK 50 per share. At the closing price of SEK 70 on the first day, Attendo reached a market cap of SEK 11bn. At the time of writing, Attendo's share price had fallen slightly to around SEK 67.

The initial surge in Attendo's share price suggests the stock was priced too low, or that there was simply substantial appetite among investors for the listing, in which 30,000 investors acquired shares – the majority of which were members of the general public.

That the stock was undervalued is denied by IK partner Alireza Etemad: "In the Swedish market, there have been a lot of IPOs with cornerstones that have had significant outperformance in the first days of trading, while other IPOs have had negative share price performance. We are happy with the IPO of Attendo and pleased with the result. We cannot comment on how other investors value the shares."

The exit comes nine years after IK acquired Attendo in an SBO from Bridgepoint and other investors, through its Industri Kapital 2004 vehicle. "We only exit a portfolio company when the time is ripe," says Etemad. "For Attendo, we felt it was the right time in the company's development to broaden the ownership base."

Care scare
The public's response to Attendo will be welcomed by private equity more broadly, as the publicly financed private care industry has long battled reputational issues in Sweden.

Following the Carema scandal in 2011, debate has raged in the public, political and media circles about whether private companies providing outsourced public services should have profits limited by regulation. Etemad says neither the choice of exit route nor the timing was influenced by the debate.

Ahead of the June IPO of Apax and Nordic Capital's healthcare provider Capio, Swedish newspaper Svenska Dagbladet suggested the divestment was a case of private equity dumping assets with political and reputational risk on the public market and less savvy investors.

Etemad rejects suggestions of this being the case with Attendo's IPO, saying institutional investors and retail investors are well aware of the investments they make and that all investments involve risk.

"Secondly, we firmly believe the fundamental drivers behind the sector with increasing care needs, and requirements for increased adaption to personal needs of care takers, will ensure that private companies will continue to play an important role in the care sector," says Etemad. "In the case of Attendo, a positive side-effect from being a publicly listed company is increased transparency, which by extension leads to increased opportunity to assess the risks involved in investing."

Single track
Carnegie and SEB were mandated to run the IPO of Attendo around September 2015. The IPO followed what has already been a strong year for private equity-backed flotations in the Nordic markets, which have seen seven PE-owned companies listed at strong valuations and a stable Swedish bourse.

Etemad says the broad ownership base afforded by a public listing was a key motivation for choosing an IPO and not running a dual-track process, though there had previously been interest from trade buyers and private equity.

Five cornerstone investors were announced ahead of Attendo's listing and a cornerstone approach was also used for Capio's IPO four months prior. Etemad says bringing in large investors as cornerstones prior to flotations has become customary in Sweden: "Attendo gained a lot of interest from Swedish and international investors early on in pre-marketing, which further enhanced the deal certainty given we already had five long-term investors signed up as cornerstone investors at announcement."

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