Nordic Capital raises Europe’s largest fund this year

Fund XI held a €7.9bn first close in May and comes off the back of the firm's debut mid-market vehicle.

Nordic Capital is set to hold the final close on its 11th flagship fund on €9 billion, a conference has heard.

“It’s just closing in a couple of weeks’ time,” said Scott Church, co-founder of Rede Partners, during a panel at the British Private Equity and Venture Capital Association Summit in London on Thursday, adding that it was coming in “at about a 50 percent increase in fund size in this very difficult environment”.

Klas Tikkanen, Nordic’s chief operating officer, said on stage that fundraising for Nordic Capital XI took six months and that the firm has already begun investing. It launched in January, according to PEI data.

The firm targets investments in technology, healthcare and financial services.

Fund XI held a €7.9 billion first close in May, PEI reported previously. The target size is undisclosed. Washington State Investment Board committed $300 million; Minnesota State Board of Investment €90 million; and South Carolina Retirement System €50 million, PEI data shows.

Fundraising for Nordic Capital XI follows a quick capital raise for the GP’s debut mid-market fund, Evolution Fund I, which collected more than €1.2 billion after three months on the fundraising trail. Evolution Fund I had a €750 million target and follows the flagship’s focus on control buyouts in healthcare, tech and financial services, albeit in companies with smaller enterprise values.

Fund XI is about €3 billion larger than its €6.1 billion predecessor. It is thus far the largest Europe-based fund to reach a final close this year, ahead of the €6.9 billion BC European Capital XI, according to PEI‘s H1 Fundraising Report. There were 4,055 funds in market seeking $1.2 trillion as of June, of which $118 billion is being sought for Europe-focused strategies.

Asked by Church about lessons learned on fund management, Tikkanen noted the firm had learned the hard way that “it’s not good to come to LPs with something you want to do… and to come too late”.

Tikkanen added: “What can be controversial, we did the biggest ever continuation fund… in 2017. So come early, test it with the LPAC early… be very transparent with what you want to do and why.”

To continue Nordic’s growth, Tikkanen said the firm will “continue swimming ahead of everyone who is competing with us” as well as to constantly look at subsectors via investment themes.

“The biggest threat to all of us is regulation and [politics],” Tikkanen said. “There’s quite strong leftist winds blowing even within right-wing parties that can affect market sentiment. We’re spending a lot more time and resource speaking to politicians, journalists… and beefing up our public affairs [team] as well.”