Pricing, reputation remain top concerns for Nordic players

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11 May 2015

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The latest unquoteт Nordic survey, published in association with Delphi, highlights the regionтs healthy private equity market, but reveals some potential dark clouds looming

After a somewhat turbulent year in 2013, activity levels in the Nordic private equity market bounced back strongly last year, buoyed by easing fears over regulatory issues and continuing growth in the region's economies. This improving confidence clearly translated into much stronger dealflow – deal volume in the region enjoyed a rise of 12.5%, from 184 deals in 2013 to 207 deals in 2014, while aggregate value increased by an impressive 32% from €9.5bn to €12.6bn, according to unquote" data.

These improvements were primarily fuelled by an upsurge in Swedish dealflow. The country reported 83 deals worth €3bn in 2014, compared with 59 deals worth €1.1bn in 2013, representing a 41% increase in aggregate volume and a 151% increase in overall value.

Besides Sweden, Finland was the only other country to report an increase in deal volume – rising from 35 to 44 deals. Denmark declined from 53 to 47 deals, while Norway dropped from 36 to 33 deals.

However, despite the positive annual statistics and the legal rulings that appeared to dim the spotlight on private equity advisers' tax affairs, clear concerns remain in the market and these are echoed in the survey results. Rising asset prices and fierce competition for dealflow – especially at the larger end of the market – as well as reputational concerns, rank high on the list of practitioners' worries. Meanwhile, a significant cross section of survey respondents feel that changes to governance and reporting regulations are still likely to drive important change.

Whether or not these issues have directly affected the market into 2015, it is clear the balance of deal-doing has shifted. In the first quarter of the year, Swedish deal volumes declined by a third from their Q4 levels to reach the lowest point in more than three years. Finland, meanwhile, also dropped sharply – from 16 to seven deals. These falls were partially offset by growth in dealflow in both Denmark (11 to 15) and Norway (nine to 10) transactions. Overall, the Nordic region noted a decline of 10 deals from 54 in the fourth quarter of 2014 to 44 in the first quarter of this year.

Still, it is important to note that the first quarter of 2015 was a poor one for many regions across Europe – not least the UK – and in many respects the sentiment coming through from the survey is positive.

View the full survey, with comments and analysis here.