Nordic private equity market undergoes cautious evolution

Secondary buyouts in the Nordic region saw a steady increase in the fourth quarter of 2012, and now account for around 30% of total exit volume. Adveq chief executive Sven Liden also noted a trend towards increasing secondary buyouts in the region. He says there are two reasons for this: "First, there are few other exit opportunities, and second, there is a large amount of dry powder left in the Scandinavian market."

The Nordic region is preparing itself for the deployment of €10bn worth of funds raised in the past year. Hence, this will be a year of intense competition for quality deals, with an abundance of capital to be deployed.

Liden speaks of a "quality gap" in the Nordic region, where a few firms are doing very well, even as other firms struggle. Nordic Capital, which recently held a first close and acquired Swedish home shopping company Ellos at the end of February, has had a reasonable run, though reducing its final target suggests it's not entirely smooth sailing.

Ratos, which together with Bonnier AB agreed to merge SF Bio and Finnkino Oy in March to form the Nordic region's largest cinema group, has stated its portfolio company profits might not pick up until after mid-2013.

Better balance across region
While still the biggest market in the region, Sweden is now losing some of its dominance. So far in early 2013, other Nordic countries are picking up the pace, with a number of larger deals taking place outside of Sweden.

Denmark has seen the greatest increase and is now gaining substantial momentum, especially with regards to the pharmaceutical and technological sectors, where the country has seen a lot of activity.

SL Capital's Graeme Gunn believes that, in addition to Denmark's expanding share as a result of the country's good business core, there are also more aggressive private equity firms in the Finnish market today. Norway's growth in the capital-intensive Barents Sea oil and gas market is a meaningful boom too. "Pricing on some of these deals continues to be relatively aggressive," he states.

Kristian Bagger, managing director at investment bank Moelis & Co, says he is "cautiously optimistic" about 2013. In his view, it is all a question of time. "The bottom [of the crisis] has been reached. We are on our way out, but the question is: how quickly?"

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• Topics
• Nordics
• Industry
• Nordic Capital
• Aberdeen Standard Investments
• Adveq