
The end of the Nordic dream?

Buoyant economies and market-beating returns have long made the Nordics top of LPs' wish lists. But a slowdown in exit activity combined with an increase in capital chasing deals may indicate tougher times ahead.
It was, for the last five years, the region everyone wanted a piece of. Judges at the unquote" awards four years ago were so enamoured with the Nordic region's prospects, they joked we ought to create an award for a region (versus for a firm).
Indeed one of Europe's most successful exits of all time, the €9.6bn sale of Nycomed by Nordic Capital in May 2011, stemmed from the region. And the liquidity that sale pumped into the market buoyed Europe's booming high-yield market during the mini-bubble of Q2 2011. People in the industry also never seem to tire of regaling with the success story of Skype and its local roots.
But, despite a series of other impressive exits – most recently the €655m sale of Permobil to Investor AB, generating 5x money for Nordic Capital – the GP is settling for a smaller target on its fund. And last year at the annual unquote" Nordic Forum, the national news channel stormed in with a video camera, demanding access to the speakers at the event. Clearly public perception of the industry had turned sour.
Has the Nordic region lost its luster?
The region recorded its lowest level of exits since 2008 in 2012, according to Argentum, a Norway-based asset manager. And the precious few exits that are occurring now are increasingly secondary buyouts – arguably "easier wins" than IPOs or trade sales, and accounting for nearly a third of all exits in Q4, according to unquote" data. In fact, Adveq CEO Sven Liden backed this up in a recent interview with unquote", putting it down to the aforementioned lack of other exit routes as well as a capital overhang.
"It is definitely a bubble now," one LP told your correspondent. And Sonya Pauls, partner at SJ Berwin, told unquote" last month in Warsaw that Italy, Poland and Germany are the hottest places for LPs right now. The Nordic region is notably absent from the list it once topped.
It is not all bad news. Just yesterday Creandum announced it hit its €135m target for its latest fund, indicating the region indeed remains alluring.
These challenges and other developments will be debated at the ninth annual unquote" Nordic Private Equity Forum on May 15 in Stockholm. We look forward to seeing you there.
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