Private equity LPs flock to the Nordic region

"We are significantly overweight in the Nordic region," said Tim Creed of global fund-of-funds Adveq. The fund-of-funds is not alone in seeing the attractiveness of the region. Thomas Liaudet of fund placement adviser Campbell Lutyens revealed his firm's secondaries team asked 150 LPs which funds they would prefer to take stakes in, Nordic GPs occupied five of the top-ten places on the final wish list.

While the expected flurry of secondaries transaction has yet to appear, a panel moderated by Mattias de Beau, from secondaries specialist Greenpark Capital, agreed that this situation could change. Volume is now slowly picking up, as a back-log feeds the supply side and a vast amount of capital raised in specialist secondaries funds fuels demand, the panel said.

The Nordic model
In addition to a number of fund managers with very good track records, Creed also highlighted the good level of corporate governance in the region as an attractive factor for investors. In addition, the practice of having extensive networks of industrial advisers is widespread in the region.

This was confirmed in the mid-market GP panel, where 3i, Altor, Polaris and Procuritas all confirmed they made extensive use of their industrial networks in appointing chairmen and sourcing new deals. One panelist noted: "The more I work with this [the private equity industry], the more I realise the importance of managers and chairman," concluding that while planning is good, implementation is vital.

Challenges ahead
Despite optimism, some parts of the industry remain cautious. Danske Bank Private Equity's Jesper Knutsson expressed concern over the amount of debt in private equity-backed companies that will soon need to be refinanced. "I am enormously worried," he said. He believes the current frenzy in the market suggests the industry has not learned its lesson, with debt returning to the market led by banks eager to generate new business again.

Sobering thoughts were also offered by law firm SJ Berwin. In overview of the developments on the terms and condition and investor activism in the European fundraising market, Nigel Van Zyl highlighted the new focus on investor down side protection, with provisions to remove GPs that are not defaulting. He also noted that the ILPA guidelines have added an interesting new aspect to negotiations.

Thank you to our sponsors: Delphi, SJ Berwin, Greenpark Capital and Aztec Group.

 

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