A total of 19 senior and unitranche deals were reported in the Nordic region in the first half of 2022, according to Houlihan Lokey, and 14 of those deals were done by private debt funds versus banks. That figure of 19 deals in H1 compares to 45 completed in the region in the full year 2021 and 25 in the full year 2020, showing how activity has remained fairly strong.
Number of funds focused on Nordics to close since 2017
Total amount targeted by Nordics-focused funds in market
Sweden and Denmark continue to be the main drivers of dealflow in the Nordic region, with more than seven out of 10 closed transactions in the region emanating from those two countries in the first half of 2022.
Sandro Näf, co-founder and CEO of Copenhagen-based Capital Four, says: “If you look across the market, we have experienced a good first half-year but we expect a slowdown in the second half. The overall professionalisation of the private debt market is developing very nicely, with both institutionalisation of debt structuring and more and more sponsors in the mid-market creating dedicated teams, and the ESG agenda quickly spreading from the private equity community into credit.”
In terms of sectors, Näf says: “The biggest areas we are typically engaged in are healthcare, technology and services, and those have actually done well from a deployment perspective. Those of course are areas that have proven over the past decade to be more resilient, and they are becoming more popular as we face more challenging quarters ahead.”
Stockholm-based ARCOS Capital launched its inaugural evergreen private debt fund in February this year with support from a small number of large institutional investors, targeting senior loans in the Nordic, DACH and Benelux region for companies with more than €10 million of EBITDA.
Founder and managing partner Johan Hultner tells Private Debt Investor that there is an opportunity in the lower risk end of the market where banks have traditionally dominated, applying tight deal terms and modest amounts of leverage: “Investors can already get quite a lot of exposure to unitranche through the direct lending funds but they see us as a way to capture the safe, senior end and diversify their risk-return.”