Nordic Capital Fund IX holds final close on €4.3bn

According to the GP, the fund was oversubscribed and exceeded its €3.5bn target in seven months. Due to strong demand, the vehicle closed 23% above target.

The process took a lot of work as LPs did not cut corners and conducted the due diligence process, Nordic Capital partner Mark Bulmer told Unquote.

LPs gave their consent quite late in the process to increase the vehicle's hard-cap and allow a handful of strategic investors on board, at which point the fund had already deployed capital for three deals. This raised the hard-cap from its original €4bn mark to its final €4.3bn mark, Bulmer added. 

The strategic investors are intended to help with the fund's investment strategy in the long-term through various ways such as co-ownership.

Nordic Capital has completed three deals from the fund this year, having invested in European Dental Group, ophthalmology chain Ober Scharrer and mobile payments business Trustly.

Fundraising was led by the GP's in-house investor relations team, supported by MVision as global placement agent. Ameris worked on Nordic Capital's behalf in South America, and Ropes & Gray acted as lead legal counsel.

The previous vehicle, Nordic Capital Fund VIII, held a final close on its hard-cap of €3.5bn in late 2013. The GP also recently completed the transfer of the remaining nine portfolio companies from its seventh fund to a continuation vehicle, Nordic Capital CV1. Coller Capital acted as lead investor in the transaction, which was fully underwritten by Coller's seventh fund and Goldman Sachs Asset Management's Vintage Funds. The auction process resulted in a €2.5bn transaction.

Fund IX is the largest raised by the GP in a decade – it matches the €4.3bn gathered for Nordic Capital Fund VII in 2008.

Investors
Around 70% of existing investors from the predecessor re-upped, in addition to commitments from new investors. The vehicle received commitments of up to €150m from Minnesota State Board of Investment and $75m from the New Mexico State Investor Council, according to public sources.

The LP base comprises public and private pension funds (35%), sovereign wealth funds (20%), funds-of-funds (15%), family offices (15%), and financial institutions and endowments (15%). Geographically, investors are from North America (40%), Europe (35%) and Asia (15%), with new investors in the Middle East and South America (10%).

Investments
In line with the strategy of its predecessor fund, Nordic Capital's latest vehicle focuses on five core sectors: healthcare, financial services, technology and payments, consumer retail, and industrial goods and services.

The fund is expected to complete 15-20 deals, according to Bulmer.

High valuations across sectors in the Nordic countries – particularly in the healthcare market – have meant Nordic Capital has found itself on the losing end of bidding wars, said Bulmer. The GP typically shies away from structured auctions and relies on is proprietory pipeline network, he added.

In order to select assets in a highly valued market, the investment team uses an internal screening programme to evaluate which assets are likely to deliver positive returns. It helps to be conservative on exit options and not assume an overall agressive multiple – there is a lot of proactive work, Bulmer noted.

The fund will mainly seek to deploy capital in the Nordic region, in addition to investing in European businesses and in global healthcare. It will also continue the GP's co-investment strategy.

People
Nordic Capital – Kristoffer Melinder (managing partner); Mark Bulmer (partner).

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