The state of Nordic private equity 2019


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Table of Contents

1 Foreword

2019 was another golden year for Nordic private equity. The activity was especially solid for Nordic businesses in the venture phase, where the number of investments increased for the third straight year and surpassed the €1 billion mark for the first time in our tracking (read more). Technology is the common thread for many of the success stories coming out of the region, and it is central for the three structural growth trends that Bjarne Lie of Verdane believe have most potential (read our interview). Nordic tech has a long tradition for building towards an international market by developing a culture of competitiveness, strengthened by investments in R&D from the Nordic governments. In the private equity community, it is expected that more tech companies will enter the buyout stage in the coming years.

Competence coupled with capital is what private equity is about. We see that private equity-owned companies grow faster, are more profitable, and punch above their weight when it comes to creating jobs. As an example, our portfolio outperforms small-cap companies on the Oslo Stock Exchange in terms of job growth, with an average 10.2 percent annual growth in the last 15 years, compared to 2.6 percent for the listed small-cap companies.1 Private equity is specially equipped to handle the disruptive elements that we now see in the market. Private equity-teams are trained at serving markets differently, to try out and perfect new approaches, which is critical for economies to grow and be competitive.

When we talk about growing companies and creating new jobs, this growth should be sustainable. My view is that the private equity industry is mindful in general of the challenges that the climate crisis raises and takes this responsibility at heart. Active ownership is about shaping the future of companies, where sustainability plays an integral part. Argentum has compiled an annual status report on ESG in Nordic private equity since 2012, and we see new initiatives and products launch in that respect every year. Last year, we saw that the subject dominated the discourse in the public, among politicians, and in the business world. We have talked to some notable players on the Nordic private equity scene about this emerging megatrend (read more).

When this is written in late March 2020, our societies and the global economy is facing an uncertain future due to the outbreak of the coronavirus. Private equity is well suited for times of restructuring and reorganization, and we can expect such effects now. Experience also tells us that the gap in the valuation of companies by buyers and vendors will grow, which will dampen the transaction activity in the coming months. In short, there will be challenges but also new opportunities for our industry (read our story on the topic).

Lastly, I would like to thank everyone who shared their insight and contributed to the report. I hope you think it is an insightful and enjoyable read.