Finland focus snapshot

01 August 2008

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Despite a substantial increase in the number of Finnish buyouts in 2006 compared to the previous year, up from 12 to 19, the total value of deals dropped by more than 40% from EUR2.87bn to EUR1.18bn. This is not surprising when considering Finland recorded its largest ever buyout in 2005, with the EUR1.3bn acquisition of Sanitec by EQT Partners.

Yet, compared to the buyout levels of its Nordic neighbours, the Finnish market has still some way to go. Only the Sanitec deal is in the same league as the buyouts done in Sweden and Denmark. Notably, the EUR10.18bn buyout of Danish TDC in 2006 remains the largest deal to date in the Nordics. Looking at overall regional buyout performance, the market has remained strong for the past five years, with Sweden seeing the highest activity levels in terms of volume.

Regarding early-stage deals, in 2006 Finnish investments accounted for nearly half of all capital invested in the Nordic region. This is mainly due to the EUR38m financing round of digital TV channel distributor DigiTV Plus Oy by Baker Partners and Provider Venture Partners. To date this represents the second largest early-stage investment in the Nordic region, the largest being Hitec Vision and 3i's EUR64m financing for Norwegian oil exploration company Noreco in June 2005, which was then floated in November 2007.

In the past three years, however, both volume and value of early-stage funding in Finland has decreased. Similarly, new capital raised in 2007 has dropped by 14% to EUR173m compared to the previous year. In terms of capital deployed, it seems investors have shifted their focus to expansion deals, where values in Finland soared by over 500%. This staggering increase however is mainly due to 3i's EUR140m financing of Finnet Oy-DNA, the mobile telecommunications operator.

The exit routes and rewards remain to be seen.

Deals by industry

Looking at sectors, no dominant trend emerges for Finnish buyout deals. However, for the Nordic countries overall, Swedish healthcare has attracted three of the five largest deals, making it the top sector in terms of total deal values. Industrial engineering constitutes the most common sector for buyouts, followed by business support. Healthcare comes fourth, after electronic equipment.

Yet, bearing in mind the increasing early-stage and expansion capital being pumped into Danish biotech industries (Capricorn and Seventure's investment in Fluxome Sciences this month is one example), perhaps we can expect to see larger deals in Denmark in the coming years as the sector matures. However, the industry still has some way to go before it reaches the number of the deals seen in the software industry, which continues to attract early-stage investment year on year.