Denmark increases share of Nordic PE deals

Since the 2008 financial crisis, Denmark has overtaken Finland and Norway to join Sweden firmly atop the Nordic private equity market, according to figures from unquote" data. From being the smallest Nordic country in terms of buyout volume and value following the crisis, Denmark has grown to consistently generate more deals than Finland and Norway, overtaking Sweden last year as the country with the most private equity deals.

In the first six months of 2016, Sweden retook its place in the driver's seat of Nordic volume/value generation, but Danish buyouts have continued to flow and the country remains far ahead of Finland and Norway in terms of private equity activity.

Though a broad host of factors determine investment choices for GPs, a look at headline macro figures can give some indication as to why Denmark and Sweden have risen above their Nordic neighbours in recent years.

Denmark was hard hit by the 2008 financial crisis, but the economy began to show signs of recovery around 2012 and has been showing small-but-steady GDP growth in the years since. OECD figures for investment and investment forecast in the Nordic region also paint a rosier picture of Denmark, compared to Sweden and Norway, suggesting more optimism about the country's mid-term performance.

 

While Denmark has nursed a fairly solid recovery, Finland has continued to struggle and remained in technical recession until only very recently. The Finnish government's austerity measures have dampened the overall outlook for the economy and the less favourable view is clearly reflected in the buyout data since 2009.

 

Norway's deal volume has steadily decreased since 2013, in part due to the drop in oil price which has taken a substantial toll on the country's economy and macroeconomic outlook. Despite the drop in deal volume, Norwegian deals made up a majority of the total Nordic buyout value in 2013 and 2014 – though this was mainly driven by a handful of large-cap transactions.

As it became apparent the oil price drop was a much longer-term issue, Norwegian volume and value tanked in step with the Brent Crude index, dropping to the lowest levels since 2006. In 2015, unquote" data recorded just 10 buyouts worth a total of €468m.

Further reading

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