Are infrastructure deals the key to the Nordic market?

In July, EQT raised more than €1bn for its second infrastructure fund, EQT Infrastructure II, in just six months. The fund is a follow-up to EQT Infrastructure I, which closed on €1.2bn in November 2008, exceeding its target by €200m.

EQT's first fund, backed by LPs such as Pantheon and Skandia, holds a substantial portfolio of 10 completed deals since October 2009 in Denmark, Sweden, Finland, the Netherlands and Spain. The latest addition to the portfolio was the secondary buyout of Norwegian offshore communications platform Tampnet for NOK 1.5bn.

With Norway's commodity-driven economy and the advanced clean energy industry in Denmark, the Nordics offer many opportunities to source infrastructure assets with high growth potential. Businesses offering support services like energy consulting to corporates have also become a trend target in European private equity. Yet, even EQT is managing its expectations.

"We expect the market to be fairly slow in the coming 24 months, with few corporate spin-offs and basically no privatisations," says Steven Gleven, partner in EQT's infrastructure division.

Tunnel vision
On the face of it, that seems to contradict current events. 3i and Allianz Capital Partners, the investment arm of the German insurance group, have just mandated Goldman Sachs and ING to organise the sale of German-Danish ferry operator Scandlines. That could be an attractive asset for the next couple of years, while German and Danish authorities work on their effort to replace the sea-connection with a tunnel. Of course, Gleven's comment is recognising the slowdown of Europe's economy, which has turned previously flexible financing options into an uncompromising molasses.

So far Europe's north, often including the Netherlands and Germany, has been praised as a safe haven, detached from the eurozone crisis and thus a better environment to source quality deals. But investor sentiment in Germany continues to fall and private equity deals in the

Netherlands have been rare throughout most of the year. The Nordic region seems to be the last man standing. At the core, the explanation for this is twofold: with economies running on a different model than in much of the rest of Europe and the world, Scandinavia has proved much more resilient to the crisis. Another point, of course, is currency: neither Sweden nor Denmark joined the European Monetary Union, a step which has served them well in the past years.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Nordics
• Infrastructure
• EQT
• Sweden
• Norway
• Denmark