Private equity congress Nordic

01 November 2008

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More than 100 private equity professionals and advisers gathered at the Sheraton Hotel in Stockholm for the annual Nordic unquote" Private Equity Congress on 6 November.

"This is a waiting game," announced Caspar Callerstrom of EQT in the first panel of the day. His fellow speakers, Harold Kaiser of Litorina Kapital, Christian Sievert of Segulah and moderator Mikael Ahlstrom of Procuritas, concurred. Kaiser also suggested that private equity itself played a part in the price inflation seen in recent years. In coming months, he believes, prices and debt levels would again normalise.

A continued drop in prices seemed to be the topic of the day. In the panel chaired by Christophe Nicolas of Greenpark Capital on secondaries and opportunities in the downturn, the participants, which also included secondary direct players, unanimously agreed that although the capital is there, they will hold investments until January when they expect vendors to accept even lower deal valuations.

Others turned their focus to bargains in the public market. Alan MacKay of 3i explained how 3i applies private equity techniques to publicly listed companies in 3i Quoted Private Equity (QPE). One of his predictions was that there will be a spike in stock market activity in 2009 and 2010. Should he be right, this could mean that IPOs could return as a popular exit option sooner than expected.

Economic downturns naturally pose challenges as well as opportunities. Anders Lindstrom of Delphi introduced some of the legal issues with respect to distressed funds. Primarily the main challenge for many Nordic lawyers, he said, is the cross-border challenges in these cases, as well as the time aspect. More dramatic effects of harder economic times were highlighted by Control Risks. The risk advisory firm explained that fraud, leaks and theft in portfolio companies tend to increase in financial turmoil, estimating that one in seven deals they work on ultimately reveal risk issues. The current climate was described as a stressful, yet exciting time, where new investment types and opportunities emerge.

The day concluded with a panel about LP concerns. Storebrand, Argentum, Wiltshire Associates and Danske Private Equity debated the fundraising environment and recent developments. Although many were cautious, Thomas Wold of Storebrand had experienced cases where they wanted to commit, but the GP had postponed the fundraising because of the current market situation. When asked what they looked for in a GP and if their criteria had changed as a result of the crisis, Alexander Brummeler of Wiltshire Associates said that even more emphasis is given to finding prudent fund managers with a proven track record. If they do, they will find the money to subscribe to new funds also in 2009.

Many thanks to Control Risks, Greenpark Capital, Delphi and KPMG for their support.