Cause for optimism

01 September 2009

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Q2 figures from unquote" show that deal activity in the Nordic region is picking up. Rikke Lilla Eckhoff takes a closer look at the numbers

Although tracking year-on-year developments in Nordic buyouts paints a dire picture of the market, the quarterly breakdown gives some reason for optimism. The number of deals more than doubled from Q1 to Q2, with value remaining largely at the same levels. This can be a sign of three things: firstly, the buyer and seller price expectation gap could be closing. Secondly, it gives us some indication of the activity in the market over the past 12 months: as the deal write-ups on the following pages show, many deals have been a year in the making and only reaching completion now. Thirdly, rather than a massive drop in volume and valuations, this is rather a normalisation and, as some industry players have labelled it, "a reality check."

It is nearly 20 years since the Nordic banking crisis in the early 1990s, and it seems safe to assume that it will be another two decades before all is forgotten and spiralling debt levels bring the current problems back, albeit in a new shape and form.

VALUE OF BUYOUTS H1 09 BY COUNTRY

Unsurprisingly, Sweden is retaining is position as the largest private equity market in the region, for both buyouts and venture. In terms of values of early-stage and expansions deals, Denmark comes second. This can be attributed to the Danes' Medicon Valley: the largest in 2009 H1 was the Essex Woodland Health Ventures-led EUR33m round for pharmaceutical company Symphogen in February.

VALUES OF VENTURE INVESTMENTS H1 09 BY COUNTRY

Investors' choice of sectors brought no surprises in the first half of the year. In the venture space, funds are targeting technology and software start-ups, and are also increasingly looking towards alternative energy. Northzone Ventures et al.'s backing of ChapDrive, a Norwegian developer of patented systems for hydraulic transmission in wind turbines, represents the largest venture investment in the sector in 2009 H1, securing NOK 52m. Yet in July, Northzone participated in an even larger fund, securing EUR6m in expansion capital for Innotech Solar, an alternative fuel business (see page 24).