In this project, we do a footprint analysis of how the Swedish private equity (PE) funds create value, and how they perform compared to their peers.
Compared to other types of capital, PE funds are special in the way they seek out companies with large, untapped potential; invest in them and support them through provision of so-called competent capital, including special sector knowledge and active ownership.
Through the last 10 years, more than 1,000 Swedish companies have received PE capital, adding up to around € 15 billion. This is about the same as the total IPO capital supplied by Nasdaq Stockholm over the same period. These companies represent more than 270,000 jobs in Sweden over the time period and around 5.5 per cent of Sweden’s GDP.
We find that companies backed by Swedish PE experience a large increase in productivity, growth and competitiveness relative to comparable companies. On a national scale we find that PE capital investments since 2005 (accumulated) may have raised the current GDP level by up to 6 per cent, equivalent to just over 0.4 per cent per year. More so, our estimates suggest 6,000 to 7,000 jobs in the Stockholm region depend on the activities of the PE industry.
Sweden is a leading country when it comes to PE. The buyout market is especially large compared to other countries and the size of its economy; it includes some of the largest and most specialized PE firms in Europe. As such, the Swedish PE sector has a unique opportunity in the coming years to expand its role in creating jobs in Sweden, become a source of export income by attracting international capital, and invest in firms at an international level.
To realise this potential, two priorities are important. The first is domestic, where it is important for Sweden to maintain an international competitive, predictable and attractive investment and taxation climate. The second is linked to international regulation, where it is important that key EU directives and international financial regulation with third countries be focused on reducing barriers to all cross-border PE investments – both within and outside of the EU.
The study is commissioned by Swedish Private Equity & Venture Capital Association (SVCA).Download