Investment Sourcing - Finding the right investment

Value creation in the portfolio companies starts with Intelligent Sourcing. It requires active ownership and, for optimal value, well-positioned exits. Nordic Capital's consistent performance is based on its focus on ensuring the maximisation of all of these elements.

Intelligent Sourcing - Superior local presence produces unique advantages

The Nordic Capital funds invested in eight new platform investments over an 18-month period,[1] representing one-third of all 30 transactions made in the region during this period Nordic Capital enjoyed prolonged periods of exclusivity in all of these transactions, a clear testament to the success of its focus on a competitive sourcing edge.

Nordic Capital's overall sourcing strategy is to be close to its geographic markets and be a local player. Nordic Capital therefore engages more investment advisory professionals in the Nordic countries than any other private equity fund. All of these investment advisory professionals are locals, and they devote a significant amount of their time to building relationships with key stakeholders, identifying opportunities, gaining insights and creating investment angles well before sales processes are officially launched. Local presence and proactive sourcing efforts generate many advantages:

Early identification of opportunities
Nordic Capital frequently identifies targets at least 6-12 months before the launch of an auction process, which enable us to pre-empt or at least be the most educated bidder

Ability to build relationships with local management teams
Nordic Capital is, by far, the party preferred by management, which can at times be a decisive factor in winning a process.

Proactive deal sourcing
Typically, over half of Nordic Capital's active projects are the result of proactive deal sourcing and long-term relationships with sellers and management teams.

Understanding target companies over time
Following a target company over time significantly increases our understanding, diminishes the investment risk and position us well in a sales process .

Proprietary and exclusive situations
Nordic Capital has historically been successful in creating opportunities outside the auction processes; i.e., public-to-private and family co-ownership situations.

  Facilitates investment financing
Nordic Capital's local presence through the advisory companies also facilitates access to investment financing from Nordic banks.

Nordic Capital is ideally placed to generate attractive leads from all types of deal sources
Since its inception, Nordic Capital has sourced 85% of its investments from families, trade sellers and public-to-privates (P2Ps)

Circa 35% of Nordic Capital's investments have been made together with the previous owners

Nordic Capital's deal flow has very little competitor overlap:

  • Extensive and vigorous network in the region, encompassing advisors, Nordic industrials, management and other key sources
  • Unique position in the healthcare market, with propriety deal flow and internal senior expertise
  • Excellent reputation with management teams in the Nordic region
  • Opportunistic approach to the stock market
  • Good access to deal financing

The figure below shows the breakdown of Nordic Capital's primary transactions by deal source:

Investment Character

[1] Per June 30, 2013