Nordico and Euroventures, two Swedish mid-market private equity firms, have announced plans to merge their operations in an attempt to achieve critical mass in the Nordic market.
The new business will have 16 employees, including twelve partners, which are based in Stockholm, Gothenburg and Helsinki. The new entity will also be opening a Copenhagen office. The CEO of the merged company will be Nordico's current CEO, Jan Ohlsson. Euroventures' current CEO, Thomas Wernhoff, will be deputy CEO.
The companies, both based in Sweden, have secured E50m in starting capital from The Sixth AP Fund and Dansk Kapitalanlæg for a new E300m fund to invest in Nordic mid-market opportunities. A E100m first close is scheduled for June, with a final close being held in the next six to twelve months.
Nordico and Euroventures have invested in more than 80 companies and achieved more than 70 exits. Euroventures funds are fully invested. Nordico has an unspecified amount of capital remaining for follow-on investments.
Wernhoff said talks over a merger had begun in the last two months. “We realised it would be advantageous to both parties if we were to achieve critical mass. Last year, Euroventures set out to raise E150m, but a fund of that size is often too small for some institutional investors who look to commit a minimum of E15m but do not want to invest more than ten per cent of the entire capital of a fund.”
Nordico’s Ohlsson said the merger would create “one of the leading players in the mid-segment of the Nordic private equity market. We are bringing together complementary industrial and financial competencies and experience. Together we will create an efficient organisation, which will result in a low management cost for our investors.”
Wernhoff said he believed that other Nordic firms might be tempted to merge their operations as a means of achieving critical mass. “I wouldn’t be surprised if firms operating at the smaller end of the market were tempted to combine their activities if they have complementary investment strategies.”
Euroventures has had more than 20 Swedish and international investors in its funds since its foundation in 1985, including 3i (Atle), BancBoston, Dansk Kapitalanlæg, FöreningsSparbanken and the Sixth AP Fund. Nordico counts Sixth AP Fund, Banc of America Equity Partners, KF FöreningsSparbanken (SwedBank), Sirius International and KP Pension & Försäkring among its investors.