8 An in-between year in buyout fundraising
Fundraising in the Nordic buyout segment saw a sharp slowdown in 2019, but the pipeline for the coming year looks solid.
Fundraising in 2019 was at its lowest since 2012. With several of the biggest fund managers in the buyout segment raising capital in 2018, fundraising fell dramatically in 2019, as these managers were not in fundraising. We expect many large managers to raise capital in 2020, and it might set a record in buyout fundraising in one year.
Only one large-cap closing
The slowdown in 2019 was primarily driven by a fall in large-cap fundraising – funds above €1 billion – with only one closing in 2019, namely Altor V, which raised €2.5 billion (see table). In comparison, large-cap fundraising amounted to €20.1 billion in 2018.
“Altor V will have the same investment focus as our other funds: Active ownership in mid- and large-cap companies in the Nordics, within many different sectors. We will also increase our effort in the DACH countries (Germany, Austria, and Switzerland, ed.),” says Pål Stampe, partner at Altor.
Stampe’s reading of the market is in line with Argentum’s outlook for 2020: 27 funds are in fundraising or have signaled that they will begin this process in 2020. Combined, these funds are aiming to secure €31.1 billion in the coming year. However, uncertain economic conditions due to the coronavirus pandemic could postpone some of the expected fundraisings to the fall of 2020, or next year.
2019 was below historical averages
In the small- and mid-cap segment in 2019, €1.6 billion were raised, compared to €2.3 billion in 2018, or a 32 percent drop. Notable closings in the small- and mid-market segment were Summa Equity Fund II that raised €615 million, and CapMan XI raising €160 million.
If we put the record high level in 2018 aside, 2019 is still below historical averages in the period 2009-2018. Fundraising in the buyout segment in 2019 reflects the overall activity level in terms of the number of investments and the equity invested, falling from record-high levels in 2018.
Buyout funds with public closing in 2019 and fund size (€)
Fund | € million |
---|---|
Altor V (SWE) | 2.5bn |
Summa Equity II (SWE) | 615m |
Gro Fund II (DEN) | 255m |
DevCo III (FIN) | 180m |
CapMan XI (FIN) | 160m |
Juuri II (FIN) | 110m |