Gloom spreads to Nordics

Despite a number of stellar performances from the likes of Altor and HitecVision, Nordic fundraising for the first half of 2008 was down more than 50% year-on-year, while investments dropped by around a third.

Nordic private equity benefits from a relatively strong local banking network and a heavy weighting towards mid-market activity, yet the region has not been immune from the effects of the credit market freeze.

Following the boom of 2007, in which the Nordic private equity market saw €8.3 billion invested in 1,111 companies – a 40 percent increase on 2006’s figures – activity for the first half of the year slowed by around a third, according to a study from the European Private Equity and Venture Capital Association.

The Nordics: a bit cloudy

In spite of this slowdown, however, limited partners have kept faith with many of the region’s managers and there have been several notable Nordic fundraising success stories this year.

In February, Norwegian oil and gas specialist HitecVision closed it fifth fund on $800 million, exceeding its $600 million target after just three months of marketing. In August Altor Equity Partners whipped round investors in just two months to close its €2 billion third fund in August.

More recently November saw Nordic Capital close Fund VII on €4.3 billion, having gone to market with a target of €3.7 billion, and Herkules Capital, the Norwegian firm formerly known as Ferd Private Equity Fund, raise Norway’s largest ever fund at €690 million.

However, despite the perception created by these incidences of fundraising success, the first half of 2008 actually saw a year-on-year decline of 58 percent in funds raised, according to the EVCA study.

“Fundraising has clearly become more challenging in the past months. The uncertainty of available credit for new investments is visible in the investors’ behaviour,” said Heikki Westerlund, chief executive of Nordic alternatives group CapMan.