The trappings of wealth

A number of possible explanations have been proffered for the runaway success enjoyed by Harald Mix when he spearheaded Stockholm-based Altor Equity Partners' €650 million debut fundraising last year, beating a €500 million target in just four months. There was, of course, Mix's outstanding track record at Industri Kapital, where he was involved in some top performing deals at the buyout house he joined as a founding partner. A further reason is his apparent shrewdness in identifying an under-served niche in the Nordic upper mid-market. But there's a third factor, albeit one rarely considered: Mix's weekend job as head coach of a children's football team.

To give any credence to this apparently outlandish claim, one has to understand that in the Nordic region great emphasis is placed on how much an individual contributes to society, and possessing the common touch is seen as vital too. “It's a cultural thing,” says a leading London-based placement agent familiar with the region.

“Egalitarianism is the dominant philosophy and no-one's supposed to break away from the pack. That's why coaching a kid's football team at weekends is appealing. It even allows people to overlook the fact that you have a fancy summerhouse.” To suggest that Mix's weekend hobbies were directly responsible for Altor's fundraising success would be stretching it, not least because much of the fund's capital was raised overseas. But altruistic engagement will certainly do you no harm in this part of the world.

These perceptions form the context for a debate currently raging on Stockholm's private equity scene, which surrounds whether or not some of the region's most successful private equity professionals deserve to be sweating uncomfortably in the glare of hostile local media coverage.

Private Equity International recently spent some time doing the rounds of Stockholm's private equity marketplace. We found several practitioners still preoccupied with an article published months ago in Swedish business monthly Afförs Vörlden and headlined “Riskfritt kapital”, or “Risk-free capital”. The article discussed the accumulation of large personal fortunes arising from the investment activities of three individuals: Conni Jonsson (managing partner, EQT); Robert Andreen (chief executive, Nordic Capital); and Björn Savén (chief executive, Industri Kapital).

The article's reference to the alleged use of wealth protecting measures such as “secret accounts in foreign tax-free paradises” was clearly intended to fuel the reader's indignation. It also ensured that the matter quickly became a talking point, not just over coffee and biscuits in conversations with journalists sat in GP meeting rooms, but also among Swedish limited partners too.

Local GPs told PEI that if the article had been published anywhere other than their home country, it would not have had much impact. “Local institutions are more caught up in politics than their international counterparts and are more worried about how much money individuals in some buyout funds are making,” says one.

To Swedish institutions with a public service remit, the issue is clearly sensitive. Being seen as helping to line the pockets of exceptionally rich individuals can bring unwelcome publicity to organisations such as the Swedish National Pension Funds (AP Fonden), set up to invest on behalf of the country's current andfuture pensioners. Market sources say that following the story in Afförs Vörlden, Swedish investors are now more anxious than ever to spot “hidden fees” in limited partnership agreements such as service charges and transaction fees.

However, this in turn infuriates the supporters of private equity who argue that a charge of hypocrisy should be levelled at local institutions should they seek to squeeze fund managers too hard. To what extent, these people say, are you entitled to consider the burgeoning wealth of individuals distasteful when the same individuals have delivered impressive returns for your own constituents?

Alignment of interest is difficult to get right in private equity no matter where in the world it is practised. In Sweden, we learned, it is even more complicated than elsewhere.