Nordic Capital has closed its eighth buyout fund on its €3.5 billion hard-cap.
The firm had to turn investors away as the demand exceeded the fund target by nearly 30 percent, according to a statement.
The vehicle, which came to market in April 2012, held an initial close on 8 August 2012, before holding a €1.7 billion first close in February 2013.
Nordic attracted a diverse group of investors including public and private pension funds, sovereign wealth funds, financial institutions, endowments and family offices, and other institutional investors in North America, Europe, Australia, Asia and the Middle East.
Existing LPs represented 64 percent of the committed capital in Fund VIII. More than 50 percent of fund commitments came from public pensions and sovereign wealth funds with “significant interest” from new investors in Asia, the Middle East and the United States, Nordic said.
The fund close marks a successful outcome for Nordic, which has not enjoyed a straight forward fundraise. In June, Nordic asked LPs for a fundraising extension until 8 February 2014. The firm decided to extend the fundraising for six months as some LPs were still waiting for administrative and legal approval before being able to commit to the vehicle. Ramadan and the summer holidays were also reasons the firm needed more time, as many LPs were away during this period, a source told PEI in July.
This extension request came after Nordic already reduced its fund target from €4 billion to between €3 billion and €3.5 billion in October 2012. It took this step because it did not wish to engage in a protracted fundraising process.
“When we started the fundraising there was a lot of uncertainty in Europe about the future of the euro. Even though we are operating in a part of Europe that has been performing better than the rest of Europe, we were faced with these uncertainties and this impacted the fundraising,” Kristoffer Melinder, co-managing partner at Nordic told Private Equity International.
Yet the fundraising re-gained momentum after the first close when the uncertainty around Europe subsided, according to Melinder.
“At the same time, we could focus on the core Nordic Capital message which is the track-record. Since 2011, we have returned €6 billion in gross proceeds and the average return on the investments was 3.6x, which is in line with our historic track-record,” he added.
Nordic has made a number of successful divestments whilst on the fundraising trail. In June, it sold IT provider EG to fellow private equity firm Axcel for between €160 million and €170 million. The sale, which was the first exit of Nordic’s Fund VII, a €4.3 billion 2008 vintage, generated a 4x return and a 30 percent IRR, a source said at the time. In April, Nordic netted a 5x return when it sold wheelchair business Permobil to Investor.
In the end, Nordic could have raised its original target, but decided to stick with the €3.5 billion figure. “When we made the decision to go for a €3 billion fund, it was in order to focus on investing the capital. Fundraising takes up a lot of resources and having a focus on investing and developing our investment pipeline was a clear priority. Having a €3 billion or a €4 billion fund doesn’t make a big difference to us,” Melinder said.
Nordic has been putting some of the capital in its latest fund to work; in April, it bought Unifeeder, a Danish logistics company, from London-headquartered Montagu Private Equity for approximately €400 million.
MVision Private Equity Advisers acted as the global fundraising adviser for Fund VIII. Ropes & Gray LLP acted as legal counsel to Nordic Capital during the fundraising.