13. PE-backed exits: Lowest number in ten years
Exit activity experienced a slowdown in 2020, partially because of the pandemic. Fund managers were focusing on existing portfolio companies and seeking opportunities for them.
Buyout funds completed 68 exits of Nordic companies in 2020. In context, the number of PE-backed sales has not fallen below 70 since 2010. In the period 2013-19, the activity has been remarkably stable, in the interval between 79-97 exits every year (see graph below).
Sixty-nine per cent of buyout exits were completed in the second half of 2020, illustrating how the uncertainty in the first half of the year slowed down exit activity.
“The market conditions were challenging because it was almost impossible to meet physically. This impacted sectors like industrials, where factory visits are critical to valuing the transaction. Also, there were uncertainties around how companies, in general, would perform financially. This created a price distance between buyers and vendors,” says Joachim Høegh-Krohn, CEO at Argentum.
Most exits in the industrial sector
As Høegh-Krohn points out, companies in the industrial sector have dominated among Nordic buyout exits. Sector-wise, this changed to some extent in 2020, with the consumer (29 %) and ICT (26 %) sectors catching up with industrials (31 %). Exits of industrial companies saw a moderate decline of 4 percentage points compared to the average between 2015-19 (see graph below).
“In our conversation with GPs, many companies do not see the need to exit in 2020 because they can wait until the situation normalises. On the other side, interested buyers do not want to rush based on uncertain information. As expected, we have seen an increased exit activity in the last part of 2020 and into 2021,” says Høegh-Krohn.
PE funds only exited two health care and life science companies. This constitutes 3 per cent of exits, compared to an average of 11 per cent in the last five years. A possible explanation for the reduction in exit activity in the sector might be favourable valuation combined with expectations of further growth for such companies. In general, many healthcare companies’ share values have been increasing due to the pandemic and the highlighted focus on health care and services.
Notable exits dominated by ICT and industrials companies
Among prominent exits were three ICT companies:
- Ratos exited Bisnode – a Swedish company engaged in providing digital business, marketing and product information – in a trade sale to Dun & Bradstreet (US)
- Marlin Equity Partners (US) exited Iptor, a Swedish leader in distribution and supply chain management, planning and logistics software and services, to Bregal Unternehmerkapital (DE) in a secondary deal.
- Summit Partners (US) sold Danish website and digital marketing provider Siteimprove to Nordic Capital
Further on, there were six notable industrial exits:
- Advent International (UK) exited the Danish food packaging company Færch Plast to trade buyer AP Møller Holding
- Polaris Private Equity sold the Danish ferry route operator Molslinjen to EQT Infrastructure in a secondary deal.
- MB Funds sold Kotkamills Group, a Finnish producer of barrier board and whitewood, to industrial buyer Mayr-Melnhof Group (AT) in a trade sale.
- Vitruvian Partners exited Unifaun in a secondary deal where Marlin Equity Partners acquired the company. The Swedish company provides a cloud delivery orchestration platform.
- Credelity Capital exited Fameco, a Swedish industrial fastener manufacturer, in a trade sale to Keller & Kalmbach (DE).
- Bridgepoint sold its portfolio company KGH Customs Services to industrial buyer AP Møller Mærsk (DK). The company is a provider of trade and customs management in Europe.