Unquote

Securing commitments

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Mega buyout houses such as Apollo, TPG, Blackstone and Kohlberg Kravis Roberts are in the process of raising jumbo funds, but in a much stickier environment than before. Sovereign wealth funds have stepped in to make up for smaller investments by pension funds, which now have less appetite for the largest funds. With few exits being made, LPs are feeling the pain because they are not receiving cheques, either from profits of holdings sales or from generous dividend payments from portfolio companies of the largest buyout houses. However, this could mean that the smaller houses can attract investors that previously were unattainable for them. Some prominent Nordic firms are currently fundraising or preparing to, most notably Nordic Capital and Altor. These funds are already high profile and popular among investors; they could potentially become more sought after than before. Consistent performance has also been the norm for them, a trait much appreciated by LPs

Funds that might face more difficulties, regardless of size, are emerging managers. In the current challenging and uncertain environment, LPs will favour GPs with established track records and proven strategies. However, contrary to this sentiment, Vitruvian Partners managed to close its first pan-European fund on EUR925m (page 05), one of the largest ever maiden funds in Europe, although there is speculation as to whether more had been targeted.

How quickly LPs will change their allocation to private equity is also said to depend on the type of funds. Funds-of-funds are argued to be quicker to change their policy, while pension funds can be slower to react. Most LPs view the asset class as long term and therefore could view the down market as an opportunity for the GPs to make successful investments, going on to produce successful exits in a few years. So, it seems like Nordic funds in fundraising will still find it possible to attract LP commitments, and a positive momentum will be maintained in the time to come.

Yours sincerely,

Linn Ronning

Nordic Editor, unquote"

Tel: +44 20 7484 9824

linn.roenning@incisivemedia.com.

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