EQT Partners Launches Nordic and Danish Funds

EQT Partners is launching a second Scandinavian buyout fund with a target of SKr 3-5 billion (ecu 365-585 million). The Scandinavian buyout house, headed by managing director Conni Jonsson, was founded in 1994 by the Wallenberg Group investment arm Investor, US private equity group AEA Investors and S-E Banken. Its first vehicle, Scandinavian Equity Partners, which raised close to SKr 3 billion in 1995, is now approaching full investment, having to date deployed SKr 2.4 billion in nine buyouts in the Nordic region.

Through EQT Scandinavia II, EQT Partners will maintain its existing focus on buyouts of mid-sized Nordic companies with a transaction value of SKr 500 million or over, where the group always takes either majority or controlling stakes. EQT Partners expects activity in the Swedish buyout market to continue at current high levels for the foreseeable future and is therefore confident of its ability to find sufficient suitable investment opportunities for the new fund, even if it reaches the upper end of its target range. In view of the burgeoning Swedish buyout market, it is also likely that EQT Scandinavia II’s portfolio will resemble that of the first fund, with a majority of investments in Sweden-based companies. To date, Scandinavian Equity Partners has made two investments in Denmark, Sabroe Refrigeration and Struers, and one, Perlos, in Finland. Deals to date in Sweden are: Brukens Nordic AB, which was sold in January of last year; Royal Scandinavia, Duni, FlexLink, TAC and StjarnTVnatet.

In parallel with the second regional Nordic buyout fund, EQT is establishing a dedicated fund for smaller Danish buyouts. EQT Danmark, sponsored by Investor, Nykredit and AEA, is seeking to raise around DKr 1 billion (ecu 130 million).

Partner Bengt Hellstrom explained that, while EQT Partners was sourcing deals for Scandinavian Equity Partners, the group came across several attractive investment opportunities among Danish companies that fell below the vehicle’s minimum investment limit. EQT Danmark, which will focus on deals in the DKr 150-400 million range, will enable the group’s investors to capitalise on this deal flow.

EQT Partners has set up a Danish subsidiary, EQT Partners A/S, to act as advisor to the Danish fund and opened a Copenhagen office in March. Partners Bjorn Hoi Jensen and Erik Hansen head the Copenhagen operation. Harry Faulkner, the former CEO of Alfa Laval, will chair EQT Danmark’s investment committee.

Scandinavian Equity Partners was raised principally from Nordic investors. In addition to the three sponsors and related institutions, its participants include Atle, BG Bank, the mutual fund Foreningbanken (now merged into ForeningSparbanken), Fiskars, the Fourth National Pension Fund of Sweden, Nykredit, Sirius, Skandia, Storabrand and WASA. Bengt Hellstrom said EQT Partners is optimistic that the majority of these groups will also commit to EQT Scandinavia II, though the group also hopes to bring in new investors. All the investors in the first fund will also be offered the opportunity to invest in EQT Danmark. This fund, however, will probably be raised largely, if not exclusively from Danish investors, according to Bengt Hellstrom, who reported that EQT Danmark has already received sufficient expressions of interest from Danish groups to take the fund close to full subscription. A close is planned within the next couple of months.

EQT Partners aims to hold a first close for EQT Scandinavia II at the end of June, with a second close currently pencilled in for September. The ten-year-life vehicle will combine both an LP structure and direct investment structures to accommodate certain categories of Nordic institutions that are precluded from participating in LPs. The new fund’s board will be chaired by Lars Ramqvist, chairman of Ericsson.