In 2022, Nordic private equity dealmaking held up well in the face of tightening monetary policy, which increased the cost of debt and weighed heavily on sponsors. At the same time, however, the number of funds closed in the region plummeted.
Below, we explore six key trends from PitchBook's 2023 Nordic Private Capital Breakdown that illustrate how the PE industry across Denmark, Finland, Iceland, Norway and Sweden fared in 2022.
PE professionals in the Nordic region were kept busy in 2022 as deal count increased by 6.3% from the previous year. While deal value remained flat as tightening monetary policy made the use of leverage costly, the hike in transactions shows that deals were still being completed, albeit ones of a smaller size.
Nordic investors closed only 10 funds in 2022. However, the region did see one of Europe's largest fundraises of the year: Nordic Capital's Fund XI closed on €9 billion in October. Given factors such as the denominator effect impacting LPs ability to allocate funds, it seems that the well-established firms such as EQT and Nordic Capital were considered the safest places to deploy funds.
With exits down significantly across Europe, the Nordic region saw its exit market remain in relatively good health, despite a 24% decline in value and a 26% dip in volume YoY. The Nordic region even saw six public listings in 2022, a rarity in last year's broader European market.
The IT sector accounted for nearly a quarter of all PE deals in the Nordic region last year and raked in €18.2 billion, a 5% increase YoY. The drop in valuations across the sector may well have sparked the increased activity: Hg's sale of Itm8 to Nordic PE firm Axcel could be a prelude to similar deals going forward, according to PitchBook analysts.
Sweden maintained its dominance of the Nordic PE market, accounting for nearly 44% of all deal value, or €31.5 billion. This is slightly above its 10-year average of 39.2% of all PE deals in the Nordics and is in line with the country's relatively higher GDP when compared with its neighboring countries.
Last year, add-ons accounted for a record share of total buyouts, representing 68.8% of all deals. These smaller transactions are representative of the declining economic conditions and resulted in just one deal in excess of €1 billion being completed last year, an 11-year low.
Read more: 2023 Nordic Private Capital Breakdown
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This article originally appeared on PitchBook News