About Private Equity
Private equity refers to equity investments in enterprises not listed on a public stock exchange. With an active and time-limited ownership, private equity firms work together with the management of the companies in which they invest to enhance long term value. Private equity firms receive a return on their investment through an initial public offering or through a sale or merger of the company they control.
There are two investment strategies in the private equity market. ‘Venture capital’ refers to investments in the formation and growth of early-stage companies. ‘Buyout capital’ (where Altor is active) refers to acquisitions of significant stakes in larger, more established companies.
Private equity firms are generally organized in funds into which institutional investors such as university endowments, charitable foundations, pension funds, insurance companies and banks invest. Together, pension funds and banks have significantly increased their allocation to private equity investment over the past years and provided around 42 per cent of European private equity funds in 2005 (EVCA).
The private equity industry is only successful if the companies they invest in are successful. Through formal board representation as well as active support to company management, private equity firms provide profound experience from previous development processes as well as a larger network for recruitments, customer bases and financing.
The acceptance of and demand for private equity has increased in the Nordic region as a result of a generally positive outcome of private equity investments in the region. Increased globalisation of the economy leading to a new wave of cross-border consolidation in combination with an ongoing focus on core operations resulting in further divestures gives a positive outlook on the PE market in the Nordic region. This is further strengthened by the increased awareness in family owned businesses of the benefits of partnering with private equity firms.