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Alternative Market Briefing

Nordic private equity firms take a new interest in public markets

Tuesday, November 27, 2018

Bailey McCann, Opalesque New York:

Nordic private equity firms are becoming more active in the public markets, a shift which could impact hedge funds in the region according to delegates at the recent Opalesque Nordic Roundtable.

"We have seen that some Nordic private equity firms are expanding their mandates and allowing themselves to invest in public markets, which is causing valuations to creep up," said Carl Rydin, Investment Analyst at Origo Capital. Rydin pointed to EQT's acquisition of Zeres Capital as well as the public markets team at Triton as recent examples of this trend.

Private equity firms are typically taking minority stakes in public companies. Acting as sort of patient activists, private equity sets a goal of improving company operations over a 3-5 year period as a significant but still minority shareholder. Rydin adds that as dry powder continues to build up in private equity and the competition for potential targets gets more intense, he expects to see more private equity firms change their mandates so that they can be involved in public markets in this way.

Delegates noted that investors are generally ok with an expanded mandate if the investments GPs are making in public companies are sufficiently long-term. For institutional allocators working from a very long-term investment horizon, daily liquid strategies can have some drawbacks. The minority shareholder approach gives those investors an additional stake in the public markets bu......................

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