Nordic IT fund bucks market trend

Commitments from some leading regional institutional investors have helped IT Provider to a E130m first close of its fourth Nordic technology fund.

Sweden-based IT Provider, a venture capital firm specialising in Nordic information, communications and technology (ICT) opportunities, has bucked the difficult fundraising market trend for technology-focussed venture funds, holding a first close at E130m.

 

Launched in August 2002, IT Provider Fund IV has secured commitments from prominent existing investors including Swedish National Pension Funds Three and Six, ATP Private Equity and the European Investment Fund as it hopes to raise E200m by mid-2003.

 

“Many financial institutions are still considering their allocation to private equity,” said Gösta Johannesson, partner at the Stockholm based firm. “It is a tough environment, but some investors realise the time is right to commit to the sector.”

 

Johanneson believes that after a quiet 2001, when the firm made only one new investment, 2002 saw an improvement in the investment landscape which is likely to continue into 2003. “We are seeing a growing number of promising opportunities in the Nordic region, particularly in Sweden and Finland. As companies look to focus on their core operations, there is a greater availability of spin-out opportunities.”

 

Despite the closure of some underperforming portfolio businesses last year, the firm says it has achieved more successful exits than any of its competitors in the region with more than 30 fully realised investments. The firm currently manages 34 portfolio companies in the areas of communication technologies, software and enabling technologies and will continue this strategy with the fourth fund, investing up to E5m per company.

 

The firm plans to hold a second close in March, which will include investors from Continental Europe, prior to a final close later in the year. Placement agent MVision is assisting the firm in its fundraising efforts. 

 

Despite last year’s downturn, which saw VC investment levels fall by 35 per cent compared with 2001, software was one of the strongest sectoral performers. According to data from technology research firm Windmill Reports, E1.5bn was invested in European software firms in 2002, equivalent to 25 per cent of the overall E5.9bn global total.