Nordics prominent as European private equity market shows strong signs of recovery

Stockholm, 17 June 2014 - A new White & Case and Mergermarket report - Defying the odds: the rise of European private equity - reveals that Nordic private equity exits in the last two years have boosted as they cash-in on solid investments made throughout the credit crunch. Exit volumes in 2012 and 2013 more than doubled the level recorded in 2009. In 2011 and 2012 Nordic private equity firms posted exit values of € 12 billion and € 175 billion, respectively.

To mark the launch of this report and highlight a variety of Nordic trends, White & Case in partnership with Mergermarket is holding its Nordic Private Equity breakfast briefing event in Stockholm today. This morning’s event will consist of two panel sessions featuring leading private equity figures from the Nordic region. They will reveal the report findings in detail and discuss key issues to consider in the Nordic private equity market.

Key highlights include:

The Nordics was the best performing private equity region throughout the crisis. In 2009, Nordic private equity firms closed a total of 88 buyouts worth €1.9 billion. In 2013, deal volume figures
of 112 transactions. Other than 2011, when total buyout value climbed to an exceptional €13.9 billion, annual deal value has been reliably steady.

Positive trends in acquisition financing as local arrangers in the Nordics fund deals. The region’s banking sector remained intact and banks continued providing the debt needed for deals. More recently, the credit funds and bond issues have also come to the fore.

Sector watch: Pharma and TMT to the fore. Pharma accounted for 35% of exit value, followed by TMT (27%). Consumer and industrials account for 12% each. Between them pharma, TMT and consumer accounted for seven of the ten largest deals in the Nordics in 2013 and 2014.

Nordic funds see strongest returns in Europe, with an average five-year IRR of 13%. Pooled returns in the Nordics over a 15-year horizon have generated an IRR of more than 14% compared to less than 12% in the rest of Europe, according to figures compiled by placement agent Berchwood Partners. Over a five-year horizon, Nordic funds show an IRR of around 13%, compared to less than 5% in the rest of Europe.

Foreign buyers account for three of the 10 largest deals and more than half of all Nordic buyouts in 2013.These included the 51% sale of Supercell by shareholders, including Accel
Partners, to Softbank Corporation and Gungho Online Entertainment for €1.1 billion; the acquisition of US Campbell Soup Company by Kelsen Group for €268 million from Danish firm Maj Invest; and UK-based pan-European private equity firm Permira’s purchase of Pharmaq from Orkla and Kvera for €250 million.

Stockholm-based partner Lennart Pettersson said: “The Nordic region has been the best performing private equity region due to a number of factors.  The Nordics offer a stable climate for private equity and firms have been operating in the region for a long time. In addition to that, good governance and transparency has helped shield local private equity houses from the volatility that hit the rest of Europe.

Helsinki-based White & Case partner Timo Airisto said: “We’ve seen a lot of interest from US investors in particular. The US economy has picked up and the Nordic region is very stable, so it offers an interesting value proposition.” 

“Proprietary discussions between corporates and sponsors have been improving, turning
discussions into tangible deal opportunities. Deal volume is steadily improving given strong capital markets and new forms of institutional funds looking for deals in the region, which are helping sponsors, see strong exit multiples.” said Sarah Syed, Mergermarket’s Private Equity correspondent.

 “Low interest rates and healthy investor appetite is creating a strong IPO pipeline in the Nordics, an exit trend that sponsors are reaping the rewards from. Just take the recent listings of EQT-backed ISS and Sanitec, which was the region's largest listing since 2006. Proprietary discussions between corporates and sponsors have been improving, turning discussions into tangible deal opportunities. Deal volume is steadily improving given strong capital markets and new forms of institutional funds looking for deals in the region, which are helping sponsors, see strong exit multiples.” Says Sarah Syed, Mergermarket’s Private Equity correspondent. 

Using Mergermarket data, Defying the odds: the rise of European private equity highlights the key factors and trends that are driving deal-making across Europe with a strong focus on the Nordics. The report also provides insights into changing finance structures and recent
financing trends.

For more information and/or interviews, please contact:Emelie FribergNordic Marketing Manager

Tel: +46 (0) 733 237 693

Email: emelie.friberg@white case.com