Nordic-Baltic Review - NORCOUS Academia

PRIVATE EQUITY
Money has always been sacred
in the corporate world, but
other values have cropped
up in discussion as well.
There has been talk of how
significant a dedicated owner is to the development
of the company and the well-being of its
personnel.
Nowadays, money and productivity feature
even more prominently in public discourse
than before, but this does not mean that buyers
and owners are no longer dedicated.
The current discussion has gained momentum
from the increasingly active role that
private-equity investors have assumed in the
corporate transactions market. Their return
expectations are tough, as high as 20 per cent,
– We are always looking for a responsible
buyer. Sometimes it’s easy to sell to another
private-equity company, because we are familiar
with their style of operation and management.
Private-equity firms normally hold their
portfolio companies for three to five years. Can
an owner like this be dedicated to developing
the company Will employees be reduced to
circulating assets
– If a PE firm buys a company, the rules of
the game are clear. It comes without saying
that the ownership will be only for the midterm,
Savén says.
– And anyway, what kind of ownership is
permanent these days Even the owners of
listed companies change all the time. There
No more permanent ownership
Lately, private-equity investors
have gained more purchasing
power, which has strengthened
their role in the corporate transactions
market. The trend is set to
continue, while other players in
the market regain their bearings.
when others may make do below eight per
cent.
– This has resulted in other investors also
beginning to re-evaluate their return expectations,
says Björn Savén (picture), CEO and
chairman of Industri Kapital, one of the largest
private-equity companies in continental
Europe and the Nordic region.
Founded in 1989, Industri Kapital has
acquired 53 companies during its existence,
including Lindex, Intrum Justitia, Oriflame,
Alfa Laval and Tradeka. After a few years, the
companies are re-sold or listed in the stock
market, like KCI Konecranes, which was
acquired in 1994 and listed in 1996.
24 Nordic-Baltic Review
Text: Maija-Liisa Ihanus
Secondary buyouts on the increase
The latest trend is the increased popularity of
secondary buyouts – in other words, privateequity
investors selling to other private-equity
investors. Savén says that PE companies are
strong buyer candidates, because the credit
market is so strong.
– They will continue to have a strong presence
in corporate transactions for at least a
year or two, because it will take some time for
the IPO and industrial markets to adapt to the
new situation.
When Industri Kapital is looking to exit its
ownership of a company, another PE investor
is as likely an option as an IPO or an industrial
buyer.
is no such thing as permanent ownership as
it’s not acceptable elsewhere that money be
unproductive. Why shouldn’t the best possible
return be sought also in corporate transactions,
he argues.
Prices on the way up
Roschier Holmberg’s Managing Partner Lennart
Simonsen says that lately the prices of companies
have clearly been on the increase.
– It seems clear that PE houses can support
a competitive price in for example controlled
auctions, which means that they have been
able to compete successfully with industrial
buyers for interesting targets. Although industrial
buyers can benefit from synergies, this
alone is no longer sufficient in price competition,
Simonsen explains.
But the private-equity market depends
on exit opportunities, which are good in the
Nordic markets. According to Savén, also IPOs
still remain a viable option.
– The Nordic countries still have relatively
active local stock markets. I believe that private-equity
investors will conduct a few local
IPOs, but there will be significantly fewer of
them than before. And they will not necessarily
be to local stock markets – thanks to
the Euro, Finnish growth companies have
good prospects to list for example also on the
London or New York stock markets, Savén
points out. ■