Consumer boom: the five largest Nordic consumer deals of 2015

Mikkel Stern-Peltz
05 April 2016

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The Nordic consumer sector was the only vertical to see measurable growth in both volume and value last year, in the face of an overall transaction volume decline of nearly 20%. Mikkel Stern-Peltz looks at the largest buyouts in that space in 2015

Consumer assets were the runaway favourite with private equity firms in the Nordic region last year, with the sector being alone in seeing real volume growth compared with 2014. It was by far the most prolific vertical, ahead of industrials which registered 19 deals and has historically been the most popular sector.

The 36% growth in deal volume - from 22 deals in 2014 to 30 in 2015 - is particularly noticeable given the overall decline in deal volume the Nordic private equity market experienced at the same time.

The sector's contribution to total deal volume grew from 22.7% to 38%, while its share of total deal value more than doubled - from 9.6% to 20.7%.

Low and negative interest rates in the region have supported buoyant property markets across the Nordic countries, as well as increased consumer spending incentives, while macroeconomic performance has exceeded expectations in Denmark, Sweden and Finland. The global oil price collapse is still weighing heavily on the Norwegian economy, though the country still saw decent full-year GDP growth.

Below are the five largest Nordic consumer deals of 2015 - three of which took place in the same month:

1. Nordic Cinema Group
Bridgepoint acquired a majority stake in Nordic Cinema Group for SEK 4.7bn in an SBO from listed Swedish GP Ratos and Bonnier Holding in April 2015.

Ratos netted SEK 1.7bn from the sale of its 58% stake, in an exit which had been rumoured for several months beforehand.

Bridgepoint drew on commitments to its Bridgepoint Capital Europe V, a 2014-vintage vehicle which had held a final close on its €4bn hard-cap the month prior. Nordic Cinema Group operates cinemas across Sweden, Finland, Norway and the Baltic region, generating revenues of SEK 2.61bn and EBITDA of SEK 533m in 2014.

The deal was nearly double the value of the second-largest Nordic consumer transaction, EQT's acquisition of Top-Toy.

2. Top-Toy
The Top-Toy sale saga finally came to an end in November 2015 when EQT won out from competition to acquire the Danish toy and children's products retailer in a DKK 2.325bn buyout.

Top-Toy's founding family had begun an exit process in 2014, but its insistence on retaining a large minority stake post-exit turned out to be a major hurdle for many of the company's suitors. Ultimately, EQT agreed on acquiring a 75% stake in the company, with the founding Gjørup family holding the balance.

Danish GP Axcel and Nordic private equity outfit Nordic Capital were among the buyers competing in the structured process, though the two firms bowed out in the final stretch.

The Top-Toy deal was the third-largest Danish deal in 2015, after 3i and AMP's DKK 4.1bn buyout of Danish emergency rescue and response vessel operator Esvagt, and EQT's $3.3bn acquisition of Nordic Aviation Capital.

3. HusCompagniet
EQT also takes third place on the list with another Danish consumer buyout, through its July DKK 2bn acquisition of house builder HusCompagniet. The company sells its products directly to consumers looking to build homes from scratch.

Existing owners Nordic GP FSN Capital and Lego family office Kirkbi fully exited their joint holding in HusCompagniet as part of the deal, which saw EQT tap its €4.75bn 2011-vintage sixth fund.

The GP saw off competition from Ratos, among others, for the Horsens-headquartered company that had been under the ownership of local GP Axcel before FSN's tenure.

4. Fågelviksgruppen (FVG)
In April, HIG Europe bought Nordic taxi services company FVG in an MBO from the founder-owner's holding company.

The deal was estimated to have been at the lower end of the SEK 2bn-3bn bracket, given the company's SEK 200m 2013 EBITDA, and leveraged between 50-70%.

Existing CEO Rolf Gustav Karlsson was replaced with Ole Oftedal and the rest of FVG's existing management was offered options to buy into the newco.

HIG called on capital from its €825m HIG Europe Capital Partners II fund, raised in 2013.

5. Fitness World
Oslo-headquartered private equity firm FSN Capital inked its buyout of Danish fitness chain Fitness World in the third major consumer deal of April 2015.

Estimated to be in the €100-250m size range, FSN's foray onto the frontlines of Danish fitness was financed by Danske Bank.

Denmark's mature market for fitness companies was one of the factors that had attracted the GP, which plans to shore up Fitness World's market position in the country, as well as expand its Polish presence.

Competitor Fitness.dk recently disappointed investors with its full-year results, listing the success of Fitness World as a contributing factor to its own poor performance.

Outlook for 2016
So far this year, deals in the consumer space have been less explosive than they were in 2015, with only five buyouts in total completed throughout the Nordic region. These include Litorina's purchase of building materials retailer Fresks, based in Sweden, and Maj Invest's acquisition of Danish sausage producer DK Foods, both of which were recorded at the very start of the year.

Since then, Accent Equity Partners backed the management buyout of Swedish media agency Brand Factory Group, which took place in February. Also in that month, consumer-focused private equity firm Vendis Capital inked its first Nordic deal via its investment in Ferm Living, a provider of designer wallpaper, accessories and furniture, based in Denmark.

The only other buyout completed in the space so far this year has been EQT's acquisition of Finnish pre-school and day care operator Touhula.

Given the Nordic region only recorded three buyouts in the consumer goods and services space for Q1 2015, and the explosive jump in both the value of volume of these deals for 2015 as a whole, it would seem as though 2016 is already on track to be another strong year for the segment.