SCANDINAVIA - The Nordic market is now a major player in private equity investment, according to a recent study of more than 100 institutional investors in Denmark, Finland, Norway and Sweden.
The study, by the Centre of Risk Research in Stockholm, showed private equity is increasingly becoming a key asset class for investors in the Nordic region with almost half the institutions surveyed already allocating capital to private equity and predicting a significant future allocation to the asset class over the next two to five years.
According to the findings, 43% of institutions in the Nordic region invest in private equity with investors anticipating their future commitment to the asset class will increase, on average to 3.4% of total assets under management.
Future allocation to fund of funds is expected to double from 14% to 28%. At the same time, it is predicted there will be a significant decline in direct company investment to almost half the current level, down from 28% to 18%.
Commenting on the findings, André Jaeggi, managing director at Adveq, the independent private equity fund of funds manager that sponsored the study, said: “Over the past few years, private equity has gained popularity amongst investors seeking an asset class that will provide the superior returns that traditional assets have failed to produce.
“The Nordic region has long been regarded as an important and progressive player in the global private equity market and the findings of this study confirm that private equity is now widely recognised amongst Nordic institutions as being a key component of their investment portfolios.”
The study found Europe would be the main focus for private equity investment by Nordic institutions in the next two to five years with buyout, growth and development capital investments being most attractive to investors. Emerging markets are also set to become important in the future.
Adveq said along with the increased interest in fund of funds, the study revealed Nordic investors would be looking to develop deeper specialist in-house knowledge about the asset class as its popularity grows.
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