Nordic private equity hushed but hopeful

Nearly half (45%) of Nordic deal-doers believe exit difficulties are one of the largest issues facing the region at the moment, according to a survey of delegates conducted by law firm Delphi at today's unquote" Nordic Private Equity Congress. While 2012 saw a record number of exits, the last quarter saw a marked slowdown, which may be continuing into this year.

While much of this is down to exit conditions, there may be an issue of conflicting interests – in the Nordics and beyond, according to Vision Capital CEO Julian Mash. He suggests of total global buyouts (estimated NAV of $800bn, according to Vision) a quarter are "stuck" in the wrong place. Of these, around $125bn's worth are legacy assets within portfolios of strong firms with strong prospects – but the remaining $75bn is sitting with firms unlikely to raise another fund and so are being held to ensure continuing fee income.

Perhaps surprisingly, sentiment is more positive around fundraising: 42% of respondents to this morning's survey expect commitment levels to Nordic funds to increase this year. Says Argentum's Joachim Høegh-Krohn: "We've seen a lot of capital inflow. Compared to the DACH region, we are still raising more money in Sweden than in DACH."

The Nordics have been a favourite for the last five years, but will they continue to be for the next five as well?

This may be because, though subdued, Nordic prospects remain strong relative to the rest of Europe. Nearly 60% think IRRs for 2013/2014 will reach at least 16%, while 17.5% of respondents think the returns will be even greater. Indeed, Gabriel Urwitz, chairman of Segulah Advisor, says at least 600 institutional investors have knocked on Segulah's door since the firm closed its last fund in 2008. "Investors remain very interested in the region, even if returns are going down."

An overwhelming proportion of the survey respondents, 74%, feel the Nordic macroeconomic environment is the region's greatest competitive advantage over the rest of Europe.

This is backed up by Høegh-Krohn, who says that it's a business-friendly region with healthy – if subdued – growth. "There is a perception that the Nordic market is less mature than, say, the UK market, which creates strong investment opportunities."

Mash also credits Nordic deal-doers and business owners with success, adding that they are very global and outward-looking. "International business is appealing to us since other regions' businesses often think more regionally," he says.

Clas Romander spoke about the "social contract" in his keynote speech, in which he explained that financial players in private equity have a responsibility towards future generations to avoid future crises by managing investments well.

unquote" wishes to thank the following groups for supporting the 2013 Nordic Private Equity Conference: Delphi, Coller Capital, PwC, SJ Berwin, Ipes and eFront.

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• Topics
• Nordics
• Buyouts
• Sweden
• Segulah
• Vision Capital
• Argentum