Foreign GPs boost Nordic buyout figures

On the one hand, results continue to appear meagre in light of the expectations put upon the Nordic region, and in comparison with previous years. On the other hand, good deals are still being made, despite the macroeconomic worries that continue to depress Europe.

The larger deals have all been SBOs, and foreign GPs still claim the throne: the €1.8bn Ahlsell deal saw Cinven and Goldman Sachs Capital Partners selling, and CVC Capital Partners picking up the firm. Likewise, Bain Capital moved in to pick up Triton's Bravida for a rumoured $1bn.

Meanwhile, Nordic Capital has picked up two sizeable discount retailers: Norway-based Europris from IK Investment Partners, and Finland-based Tokmanni from CapMan Buyout.

Naturally, SBOs have made up a fair share of exits, but so have trade sales. Among the larger exits, EQT fetched DKK 12.8bn in its sale of Danish cancer diagnostics company Dako to NYSE-listed Agilent Technologies. Similarly, Nordic Capital added a further $1.5bn to its Nycomed exit, selling the New York-based subsidiary Fougera to Swiss trade player Novartis.

A safe haven?
The Norwegian and Swedish economies are still growing and their prime lending rates remain slightly higher than those in surrounding countries; the Swedish repo rate and Norwegian key policy rate are both being kept at 1.5%, along with low rates of inflation. In Sweden, the executive board of the Riksbank is split into two camps: those who want to cut the rate to boost growth and reduce unemployment, and those who fear a lower rate would invite a new property bubble and subsequent crash. The latter stance is in the lead, for now.

Meanwhile, the respective currencies continue to strengthen against the euro. The Norwegian krone has reached its 2002 record strength, trading at close to 7 NOK to the euro, while the Swedish krona has reached an all-time record strength at close to 8 SEK per euro. Some expect a further strengthening of the two currencies as foreign safe haven-investors drive up demand.

Carl Hammer, chief FX strategist at SEB, says foreign inflow of capital now has more impact on the exchange rate than Swedish export orders. He points to a strong economy, low sovereign debt and sustainable public finances as main reasons for the strength of the currency, and anticipates the krona will "consistently trade at a higher level against the euro and several other major currencies, such as the Japanese yen and British pound."

A strong currency, however, raises two main concerns. Firstly, a combination of falling demand from the struggling economies and further currency appreciation against major currencies risks putting a wet blanket on growth in the Nordic export-oriented economies. Secondly, euro-denominated funds looking to put their money to work in the region will get far less bang for their buck.

 

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• Topics
• Exits
• Buyouts
• Nordics
• UK / Ireland
• France
• Benelux
• Southern Europe
• DACH
• CEE
• Sweden
• Norway
• Cinven
• CapMan
• IK Investment Partners
• Nordic Capital