Nordic Fundraising Summit 2011

If recent news and opinions are to be believed, the European fundraising environment remains rather bleak. As LPs have become increasingly selective and the amount of available capital has decreased, it is certainly going to be tough for many funds to get the capital desired. However, the Nordic region continues to be an exception, remaining attractive to LPs.

Historically, the Nordic countries have been a source of reliable return for investors. The economies have rebounded from the recession relatively strongly with private equity houses continuing to reap good returns. For LPs the region certainly remains an attractive proposition. Additionally, as Jannick Nytoft of the DVCA highlighted at the conference, those funds raised after a crisis have shown particularly strong returns.

Espen Langeland, investment director at Argentum, acknowledges the good prospects, but remains cautious as there are still hurdles to be overcome. Heightened competition from foreign investors that want to commit to Nordic funds can become a problem for local LPs. According to Langeland, foreign investors may agree to terms that local LPs would not or could not agree to. He further warned that high leverage levels in some recent investments could severely impact returns, should interest rates increase from their currently low levels.

While the return outlook for buyout funds is good, the same cannot be said for Nordic venture funds. Whereas Nordic buyout funds have, on average, outperformed their European counterparts, the role is reversed for venture investments. According to venture capitalists attending the summit, the Nordic VC industry has gone through a transformation, with a significant reduction in the number of active players. The fruits of this transformation have not yet become evident and venture capitalists aiming to raise funds will have to argue their case.

Certainly, the Nordic Fundraising Summit in Copenhagen provided an opportunity for them to pitch to LPs. Given the reported reduction in LP allocation to the asset class, any investors raising funds will have their work cut out in order to achieve their targets.

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• Topics
• Nordics
• Fundraising
• Denmark