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Sweden in focus
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could say that the market was effectively closed for one year
between September 2008 and September 2009, though of
course some transactions got done,” he says. “For the right
purchaser and the right borrower, we will consider underwriting
up to €500m and potentially even more,” he adds.
Finally, despite an improving local debt market, the fact
that many of the large global investment banks are still not
fully in play means the actual amount of debt available is
limited and this has had a noticeable impact on the market
in value terms. Even though more deals have taken place in
2010 to date than all of last
year, the value of 2010 deals
has actually seen a slight
drop, falling from €3.25bn
in 2009 to €2.9bn so far
this year. In addition to this,
only two buyouts valued
at more than €250m have
been completed in 2010 and
the average value of deals
is far lower than that seen
before the financial crisis.
“The transactions we have
completed so far this year are smaller than our standard deal
size. However, we do see a return of slightly larger deals in
the near future,” says Wikse.
Still, there are pockets of activity where even larger deals will
get funded. Healthcare has been the sector attracting the
most attention from potential buyers. “The healthcare sector
is stable, relatively immune to business cycle fluctuations and
therefore attractive for private equity funds,” says Wikse. There
have been a number of deals, including Triton and KKR’s
€850m acquisition of Ambea, showing that companies in this
sector are still attracting big investments.
With quality comes price, however, and as cash-rich private
equity funds near the end of their investment period, there
are real fears that the pressure to deploy capital will lead to
“For the right purchaser and the
right borrower, we will consider
underwriting up to €500m and
potentially even more”
Simon Wakefield, SEB Merchant Banking
inflated prices. Wikse is not too worried about this “What we
are seeing in the Swedish market is that good quality assets will
command high prices. However, lower quality assets are not
finding buyers.” This sentiment is mirrored by Göran Barsby
of CapMan “Of the few deals that are going through, the price
reflects the quality.”
The fact that funds still have a lot of capital to deploy has another
effect; the exit market in Sweden is positive. “The exit market is
very good,” says Wikse. “Sweden is experiencing strong activity
while other markets are not performing as well. As a result,
we have seen a number of
GPs from outside the region
coming in and buying assets
through secondary buyouts.”
Examples include Bridgepoint
Partners’ acquisition of
Solhaga and HgCapital’s
secondary buyout of
Frösunda LSS. Wikse also
notes that trade buyers are
increasingly active, but is less
convinced of the strength of
public markets. “The current
volatility of public markets means that IPOs are not a very
attractive exit route,” he explains.
After the hugely difficult 2008 and 2009, it is unsurprising that
appetite and confidence has rebounded, but it is also clear that
there is little danger of a runaway market. As Göran Barsby says:
“The mid-size buyout market is surprisingly small, despite the
foundations being in place for there to be a lot more activity.
We have companies with strong cashflow, a positive leverage
market and funds with capital to deploy.”
According to Barsby, concerns over the world economy are
hampering dealflow. “Sweden is a country that is highly
dependant on the export market,” he adds. Nevertheless, with
reports suggesting that deal pipelines still appear healthy, the
current situation could improve. As usual, only time will tell. ■
12 UNQUOTE OCTOBER 10 ENTIRE CONTENTS COPYRIGHT 2010 INCISIVE MEDIA INVESTMENTS LTD
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