7. Buyout deals: Reduced number of deals, yet higher investment volume
In the Nordic buyout sector a total of 108 deals were completed in 2023. Although this represents a decline compared to the previous year, the amount invested increased in 2023. The number of deals were somewhat higher in the first half of the year than in the second.
Partner at Norvestor, Fredrik Gyllenhammar Raaum describes the nature of the overall market in 2023 like this:
“2023 presented a lot of uncertainty both in terms of macroeconomic outlook, geopolitics, and financial markets, which obviously is a challenging backdrop for both investment decisions and managing portfolio companies”.
He continues:
“Most companies across markets and industries have experienced some degree of changing customer behavior as well as margin pressure stemming from inflation across input factors.”
“These changes come following many years of growth and entails changes on various levels of organizations to optimize performance and competitiveness. In parallel, AI and digital growth is requiring real investments for companies aiming to win in their markets. Incorporating all this as best possible into our processes and investment evaluations present challenges and a lot of learning”, says Gyllenhammar Raaum.
The experienced Partner at Norvestor, highlights the increased demand for quality companies:
“In light of the high uncertainty around everything from growth outlooks to financing costs, we think investment demand increased for assets with strong business models and demonstrable visibility on future growth, which continued to support valuation levels for these quality assets”.
Among the largest deals were four deals involving industrial companies
The average deal size in the buyout segment saw a significant increase in 2023. Below are eight examples of large deals in the buyout segment.
ICT
- In June, French investor PAI Partners made an investment in Norwegian company Azets, a provider of business-critical accounting, tax, payroll, audit and advisory services (read more).
- Francisco Partners acquired Macrobond, a leading financial data and technology innovator, from Nordic Capital. Macrobond, known for its extensive macroeconomic and financial database, serves over 800 organizations worldwide (read more).
Industrials
- CVC Partner acquired a majority shareholding in Danish company Scan Global Logistics in February. Scan Global Logistics is a global transport and logistics provider. The deal is said to have valued the company at $1.5 bn (read more)
- Triton acquired 94.39 percent of Caverion Corporation, enhancing its portfolio with Caverion's sustainable technical solutions across the Nordics and DACH. The move aligns with Triton's focus on sector megatrends and strategic growth (read more).
- Bain Capital acquired a controlling stake in Eleda, a leading Nordic provider of infrastructure development and services, from Altor, focusing on segments crucial for the green transition (read more).
- AquaShip and Intership, Norwegian leaders in aquaculture services, merged to form a global aqua service vessel powerhouse, with American Industrial Partners becoming the majority owner (read more).
Consumer
- Norwegian conglomerate Orkla divested a 40 percent stake in its Orkla Foods Ingredients unit to private equity firm Rhône for NOK 15.5 bn (read more).
Infrastructure
- Telenor finalized the sale of a 30 percent stake in Telenor Fiber to a consortium led by KKR. The agreed sales price valued the company to NOK 36.1 billion (read more).
Most active fund managers in 2023
| Fund manager | HQ | # of deals | Companies |
|---|---|---|---|
| Equip Capital | Norway | 4 | Lakers Group, Remagruppen, River Group, Stenbolaget |
| Monterro | Sweden | 4 | Caspeco, PLAYipp, Spark Vision, UNIwise |
| Triton Partners | UK | 4 | Assembli, Caverion EQOS, Flokk, Unica |
| Axcel Management | Denmark | 3 | Eegholm, Progrits, XPartners Samhällsbyggnad |
| FSN Capital Partners | Norway | 3 | Lobster, Polytech, Solcellespesialisten |
| GRO Capital | Denmark | 3 | Curity, Paligo, Tacton Systems |
The Norwegian fund manager, Equip, was one of the most active fund managers in the Nordics according to our data. Torkild Hebbert Haukaas, Founding Partner of Equip, says this about their investment activity in 2023:
“We kept on investing, notably in three new solid platform companies in Fund II, and we also continued our active M&A agenda in many of our existing portfolio companies.”
“The macro backdrop was more challenging, but our portfolio companies continued to perform well. Deal flow from intermediaries like investment banks and M&A boutiques was limited, increasing the importance of our proprietary deal generation and our network of industry advisors”, says Haukaas.
Industrial sector most popular
Among the buyout deals, the industrials sector attracted the most investments, 40 in total, which accounted for 38 percent of all transactions. The number of deals involving industrial companies decreased by 11 percent compared to 2022, and by 15 percent compared to the average for the previous five years.
The ICT sector attracted the second most investments, with 33 in total, which was a decrease of 15 percent compared to the average for the previous five years. This was followed by the consumer sector, which attracted 18 investments or 18 percent of Nordic buyout deals.
Investments in the healthcare and life sciences sector plummeted to 3 in 2023, down from 14 in 2022, representing a significant 79 percent decrease. Compared to the five-year average, the sector saw a 77 percent reduction in investments. However, given the small sample size, minor absolute changes translate into substantial relative fluctuations. It's also worth noting that investment levels in 2021 and 2022 were significantly higher than historical averages. Thus, the downturn observed in 2023 appears less dramatic when considering the broader context of the past few years.
Examining buyout investment trends over the last three years compared to the seven years prior indicates a noticeable pivot towards increased investments in the cleantech, ICT, and industrials sectors, at the expense of the energy and consumer sectors. However, stating that investments in the energy sector have diminished can be somewhat misleading. This is because many companies within the cleantech sector are involved in the production of clean energy, including solar and wind power. Therefore, a more accurate interpretation would be that fund managers are shifting their investments towards more sustainable and cleaner energy sources.
Buyout deals decreasing in all Nordic countries except Sweden
- Sweden: Swedish companies still attracted the most investments of the four countries, accounting for 44 percent of all buyout deals. The number of investments was 21 percent higher than in 2022. The significant increase in 2023 followed a sharp decline in investment activity in 2022.
- Finland: In 2023, Finnish companies secured 20 investments, marking a 38 percent decrease from 2022 and a 34 percent reduction compared to the five-year average. Investments in Finnish firms constituted 19 percent of all transactions in the Nordic buyout market, yet only represented 12 percent of the total capital invested. Consequently, Finland experienced the smallest average deal size.
- Denmark: In 2023, Danish companies accounted for 19 percent of the buyout deals in the Nordics. However, the number of deals decreased by 39 percent compared to 2022, totalling 20 investments. This marks the lowest activity level in the Danish buyout market since 2011.
- Norway: Norwegian companies secured 20 investments in 2023, the fewest since 2015, representing 20 percent of the Nordic buyout deals for the year. Despite this, Norway boasted the largest average deal size among all Nordic countries, with 28 percent of the total capital invested in the Nordic buyout market flowing into Norway.
More international investors in the Nordics
In 2023, there was a notable increase in the number of international Fund managers investing in Nordic buyout companies. For the first time since 2020, the proportion of investments made by non-Nordic investors increased. Furthermore, the share reached its highest level since Argentum began monitoring the market in 2008. Just as in the venture segment, this surge in international GP activity was particularly pronounced in Norway.
Despite the increase in participation from international investors, the majority of investments were still dominated by Swedish investors, who were responsible for 30 percent of the buyout segment's investments. Norwegian investors followed, contributing to 14 percent of the investments in Nordic buyout segment. Danish, Finnish and British investors were all responsible for 13 investments each, representing 12 percent of the total.