Investor AB, the Swedish parent of private equity firm EQT and listed venture capital firm Investor Growth Capital, has recorded negative returns for both firms of SEK3.5 billion (€372 million;$588 million). The fourth quarter alone accounted for SEK1 billion in losses, according to the firm’s year-end report.
Across all asset classes, Investor AB booked a negative 18 percent return for the year. Compared to a negative 38 percent return experienced in the same period by the aggregated Swedish market, Investor AB’s performance was “relatively” ebullient, Börje Ekholm, president and chief executive officer, said in a letter to shareholders. Still, he expressed his “regret” at the “unsatisfactory year for shareholders”.
The firm’s overall net asset value plummeted from SEK155.2 billion to SEK115.3 billion during 2008.
“Valuations within private equity were marked down significantly during the year. However this was partly offset by positive currency effects of more than SEK 2 billion, in principal, equally split between Investor Growth Capital and EQT,” Ekholm wrote. The value of the subsidiaries’ funds “decreased substantially” during 2008, he said. The firm declined to disclose the exact percentage of decline in private equity valuations year on year.
Despite the decline in value, the firms remained active in 2008. A total of SEK3.7 billion was invested throughout the year, of which SEK1.1 billion was invested in the fourth quarter.
Investor Growth Capital made five investments in five companies during the fourth quarter including Novariant, a US technology company; PocketMobile Communication, a Swedish mobile platform company; SkyCross, an American wireless technology firm; Skyview, a Chinese airport advertising company; and Synosia Therapeutics, a Swedish provider of products for psychiatry and neurology.
EQT closed a €1.2 billion infrastructure fund in the fourth quarter, while its EQT Greater China II fund acquired Chinese LBX Pharmaceuticals. In fourth quarter it also opened a new office in Warsaw, Poland and acquired Danish computing company KMD, along with Danish pension fund ATP.
The year-end review highlighted that despite the terrific decline in the Investor AB’s assets, the recent drop in business valuations offers potentially attractive private equity investment in the long term, “assuming you can sustain some pain until the markets recover”, Ekholm wrote.
Last year Investor AB published an overall net loss of SEK 367 million for 2007 compared to a net profit of SEK28.48 billion for 2006.
“Regrettably, 2007 was an unsatisfactory year to be a shareholder of Investor,” Ekholm said in a statement released at the time.