Nordic giants to beat pandemic worries with largest-ever funds

This year is set to see record fundraising for Scandinavia-based private equity firms amid a tougher capital-raising environment due to the coronavirus pandemic.

EQT is understood to be nearing the final close on its ninth flagship private equity offering. The firm has a €14.75 billion target and €15 billion hard-cap for EQT IX, which launched in January. Christian Sinding, the firm’s chief executive, noted on a results call in July that fundraising was “running according to plan” and that he expects it to be concluded in the third quarter.

Meanwhile, Nordic Capital has surpassed its €5 billion capital-raising target for Nordic Capital X. The firm hit a first close on over €5 billion in August after launching in March and without any in-person meeting with LPs, according to a source familiar with the fundraise.

Upon final close, EQT IX and Nordic Capital X will be the largest vehicles the firms have raised since inception. EQT raised its eighth fund in February 2018 with commitments totalling €10.75 billion, making the pan-European fund the largest ever raised by a Nordic manager to date.

The four largest Nordic-headquartered firms in this year’s PEI 300 ranking – EQT, Nordic Capital, Altor Equity Partner and Summa Equity – gathered $44 billion among them between 1 January 2015 and 30 April 2020. That figure represents more than 2 percent of the total capital raised by the industry’s largest firms during the period.

Strong macroeconomic fundamentals and open markets account for investor demand for Nordic funds, according to a report from eFront. In fact, in 2019, Nordic funds were either in the first or second rank among Western Europe buyout funds in terms of net internal rate of return, total value to paid in, as well as time-to-liquidity, eFront data show. The Nordic LBO market reached TVPI of 1.91x and an IRR of 16.3 percent, and the overall average time-to-liquidity of active and liquidated funds is 4.3 years.

Nordic funds will always have a place in LPs’ portfolios because they have produced “countless stellar examples of companies being bought and sold by PE players”, according to Sunaina Sinha, managing partner of placement and advisory firm Cebile Capital.