Swedish private equity firm Nordico Invest is to merge its operations with Industrial Equity, a division of Swedish state pension fund A-P Fonden 6, to create a new private equity fund that will invest in the Nordic middle market.
As part of the deal, the Sixth AP Fund will take over three-quarters of a stake in Nordico’s existing portfolio holdings owned by KF, the Swedish Co-operative Union. A-P Fonden 6 also takes on three-quarters of KF’s unfunded commitments to Nordico.
The new entity, Nordico Equity, will initially have around SEK1.5bn (E160m) under management and will comprise around 20 investments, with Industrial Equity contributing eight holdings and the remainder coming from Nordico Invest. The new fund is looking to raise a further SEK1.5bn, with A-P Fund 6 expected to lead the investment.
Bank of America Equity Partners, who have been direct investors in Nordico Invest, will be co-investors with Nordico Equity. According to CEO Börje Fors KF has sold its interests in the fund to focus on its core interests.
Nordico Equity will provide expansion capital for medium-sized growth companies in the Nordic region. The fund will look to make investments of between SEK30-300m. Jan Ohlsson, currently CEO of Nordico Invest, will be appointed CEO of Nordico Equity. The fund will have a management team with 11 staff and offices in Stockholm and Gothenburg.
Jan Ohlsson said in a statement that the merger would put the firm in a strong position to take advantage of medium-sized investment opportunities in Sweden, a market that he described as being ‘relatively young’. “We intend to take an active part in the restructuring of this sector,” he added.
The other investors in the fund are the Fourth AP Fund, FöreningsSparbanken, Sirius International, Lantmännen (the Federation of Swedish Farmers), SLR (the Swedish Farmers’ Supply and Crop Marketing Organization) and KP Pension & Försäkring.