ik exits wehkamp - IK Investment Partners

news
a t r i - a n n ua l
newsletter­from
Ik investment partners
i s s u e ­ 2 4 SPRIN G 2 0 0 9
06
CELEBRATING
TWENTY YEARS
PIONEERS IN THE
NORDIC REGION
10
LOCAL HERO
GROCERY
CHAIN
UPGRADE
12
TOM VON
WEYMARN
ON CORPORATE
GOVERNANCE
REVITALISING
A RETAILER
IK EXITS WEHKAMP
PC NEWS 3
IKARE UPDATE 9
INSIDE IK 14
VIEWPOINT 16
IK NEWS ISSUE 24
CONTENTS
EDITORIAL
Turning the page
04
EXITING WEHK AMP
The transformation of Dutch catalogue
retailer Wehkamp is a good example
of what active ownership can do for a
company.
09
SHARING BUSINESS EXPERIENCE
The 3 V Vets that are active in IKARE’s
Stamp Out Sleeping sickness campaign
in Uganda have received micro-credit
financing and business training from
an Insead professional.
06
The nordic buyout pioneers
In the first of a three-part series to comme­
morate and celebrate IK’s 20th anniversary this
summer, we look back at the first five years when
the company took its first steps.
10
12
ON CORPORATE GOVERNANCE
Tom von Weymarn, Senior Advisor,
IK, believes the downturn will bring
more regulation for the industry. But he
also thinks companies’ internal control
systems need to be more rigorous.
WE LOVE LOCAL
Listening closely
to the customers
brought about
Soumen
Lähikauppa’s
decision to focus
on neighbourhood stores.
05
CROSS-COUNTRY DALECARLIA
This year, Sweden’s longest cross
country ski race, Vasaloppet, attracted
ten participants from IK.
news
CALENDAR
10 June
Senior Industrial Advisory Board Meeting,
Stockholm.
During June
31 March 2009 Reports ­distributed
to investors.
news
A T R I - A N N UA L
NE W S L E T T E R F R OM
IK INVESTMENT PARTNERS
ISSUE 24 SPRING 2009
06
CELEBRATING
TWENTY YEARS
PIONEERS IN THE
NORDIC REGION
10
LOCAL HERO
GROCERY
CHAIN
UPGRADE
Early September
IK News, issue No 25.
12
TOM VON
WEYMARN
ON CORPORATE
GOVERNANCE
Editor: Charlotte Laveson,
charlotte.laveson@ikinvest.com
Assistant Editor: Camilla Telander,
camilla.telander@ikinvest.com
Texts: Jessica Dictonius, Joanna Gant,
Charlotte Laveson, Anne Holm Rannaleet,
Camilla Telander
Production: Åkesson & Curry AB
www.akessoncurry.com.
www.ikinvest.com
REVITALISING
A RETAILER
IK EXITS WEHKAMP
Early December
IK News, issue No 26.
weblinks to portfolio companies
“We are, just like
the Vasaloppet
skiers, in it for
the long term.”
EDITOR
CHARLOTTE LAVESON
NOTEBOOK
9 June
Advisory Committee Meeting, Stockholm.
“During the race I thought
‘Wow, this is really long’. And afterwards I thought ‘It’s just too long’.”
That’s a reflection by IK ­employee
Remko Hilhorst after having
participated in the world’s longest
cross-country ski race, Vasaloppet.
Ten participants from IK finished
the 90-kilometer race in February.
Their stamina and ­perseverance
is a fitting metaphore for the soul
of our company. Just like the
­Vasaloppet skiers, we have always
been prepared for the ­unexpected,
and we are, just like them, in it for
the long term. And I am certain that
the same persistency and ­enthusiasm
that has helped us pull through and
succeed since 1989 will also help us
surpass expectations in the next 20
years. In this issue of IK News, the
first of a three-part series commemorating our 20th anniversary, takes us
back to 1989-1993, when a few brave
­entrepreneurs with extra­ordinary
­vision paved the way for a whole
new industry in the Nordic region.
On page 12 Tom von Weymarn, ­
one of our senior advisors, shares
his views on corporate governance
in the light of the ongoing economic
downturn. Hopefully, something
good will come out of the EU
Commission’s plans to regulate the
financial sector and the
subsequent concerted response by the European
private equity industry
(see also page 16).
PC NEWS 3
IKARE UPDATE 9
INSIDE IK 14
VIEWPOINT 16
© 2008 IK Investment Partners Ldt. All rights reserved. Neither
this publication nor any part of it may be reproduced, stored in
a retrieval system, or transmitted in any form or by any means,
electronic, mechanical, photocopying­, recording or otherwise,
without the prior per­mission of IK investment Partners. IK News
is published three times a year by IK investment Partners, Brettenham House, Lancaster Place, London WC2E 7EN, UK.
www.attendo.se www.axtone.pl www.dynea.com www.etanco.fr www.europris.no www.flabeg.com
www.idex-groupe.com www.kid.no www.kwintet.com www.magotteaux.be www.minimax.de www.moventas.com www.pasteur-cerba.com www.polytan.de
www.schenckprocess.com www.sia-homefashion.com www.superfos.dk www.tradeka.fi www.welzorg.com
2 – IK NEWS 1/09
PORTFOLIO COMPANY NEWS
NOTEWORTHY
ADD-ON
Schenck Process
AQUIRES A PART
OF TEDO
PACKAGING STAR. The new plastic packaging
SuperSeal eliminates the need for an aluminum
sealant, thereby reducing CO2 emissions by 4%.
Award
SuperSeal saves the environment
Superfos’ unique packaging product SuperSeal had an award-winning 2008,
gaining three trophies through the year, including the famous WorldStar from
the World Packaging Organisation. The packaging will be honoured at an award
presentation ceremony in Mexico in May.
“It’s always satisfactory to receive an award for our products because it’s a
recognition of our constant drive to live up to our customers’ needs and demands,” says Anette Gottsche, corporate communications manager, Superfos.
“The new polypropylene material and peel-off and re-close functionality
eliminates the need for aluminium seals. This results in great environmental
advantages, as a single material equals easier recycling and a more rational
production process. An extra bonus is that production costs can be cut as
production is simpler,” adds Anette Gottsche.
Superfos is controlled by the IK1997 Fund. For more information visit
www.superfos.dk
Engineering specialist Schenck Process has
acquired the bulk material handling assets of Czechbased TEDO Company. The acquisition reinforces
Schenck’s position as a leading global supplier of
solutions for a range of different industries, including
mining, power, transport and pharmaceuticals.
TEDO offers modern, tailor-made, reliable and
­c ost-effective solutions for the conveyance and
handling of bulk solids and lump and piece material
on the worldwide market.
TEDO’s highly experienced
engineering and design team
will be integrated into Schenck
Process’ Czech Republic
division, in Prague.
Schenck Process is
controlled by the IK2007
Fund. For more information
visit www.tedo.cz
doubling capacity at
Hungarian plant
Elderly care
New magazine for
health professionals
Attendo Care, the leading care
company for elderly and disabled
people in the Nordic region, has
­launched a magazine on health
and care. The premiere issue of
the ­magazine Omsorg (Care) was
­released in December. Attendo
hopes the magazine will become a
­must-read for the whole sector.
“The magazine aims to provide
inspiration and help in daily life for
anyone who is already procuring care
services or planning to outsource
such activities”, says Jonas Morian,
head of information at Attendo Care.
Attendo is controlled by the
IK2004 Fund. For more information
visit www.attendo.se
Dynea, the leading provider of
adhesion and surfacing solutions,
has nearly doubled capacity at its
Hungarian plant in Kazincbarcika.
The plant produces high-value
adhesive solutions for the woodworking industry in Hungary and
surrounding countries.
The company’s customer base
is expanding across the region,
fuelling a growing need for high
quality adhesive solutions and
services. “Dynea’s investment
in state-of-the-art technology in
Hungary is testament to its longterm commitment to customers
across the region,” says Roger
Carlstedt, President and CEO,
Dynea.
Dynea is controlled by the
IK1997 and IK2000 Funds. More
information at www.dynea.com
“The investment
is testament to
our commitment
to customers in
Eastern Europe.”
roger carlstedt,
president and ceo, dynea.
SAFETY ONBOARD
Innovative sprinkler solution
IK-backed international fire protection company Minimax
has installed a unique undercover sprinkler system for the
M/S Scenic Emerald, the largest cruiser on the river Elbe in
Germany. Apart from the installation of the sprinkler system
the project also included the entire project development
process, including delivery and start-up. In order to ensure
that the system was discreet as well as safe, Minimax
devised an innovative solution; fitting undercover sprinklers
into the ceiling of the Scenic Emerald. The sprinklers are
­d esigned to blend in with the cruise liner’s elegant interior
and provide excellent protection against false alarms, which
are often caused by mechanic faults. They are also less
likely to collect dirt than conventionally-fitted sprinklers.
As the new system is GL-certified the Scenic Emerald
complies with the highest requirements concerning the
quality of safety equipment at sea.
Minimax is controlled by the IK2004 Fund.
For more information visit www.minimax.de
IK NEWS 1/09 – 3
EXIT WEHKAMP
Retail
THERAPY
The Wehkamp value creation story is an exciting example of what active ownership – including
insight, vision and hands-on involvement – can do for a company. After having transformed
the business into the online shopping market leader in the Netherlands and developed a
high-growth consumer finance operation, IK has successfully exited Wehkamp.
INVESTMENT EXPERIENCE.
Despite depressed market
conditions, IK has sealed a high
return on its initial investment.
As an online retailer, Wehkamp
is in a much better position than
many high street retailers.
4 – IK NEWS 1/09
A
ny exit in the current economic climate is an
achievement but a realisation in the retail sector
is particularly noteworthy. Although Wehkamp
is no ordinary retailer – it is the market leader in
online shopping in the Netherlands and has a fast-expanding
financial services off-shoot. Its recent sale to an investor
group demonstrates the transformation that has taken place
under IK’s ownership and the value that has been added to
what was once a struggling business.
Wehkamp is an exciting example of active ownership.
Three years ago IK went into what was quite a complicated
business, a large part of which was in decline, with a plan that
IK developed and executed successfully together with management. Wehkamp is a company in which few people were
originally very interested, but the exit demonstrates what can
be achieved with insight, vision and hands-on involvement.
Wehkamp’s new owner is an investor group comprising supervisory board member Ad Scheepbouwer, Wehkamp’s current
chief executive Paul Nijhof and finance director Berend van der
Maat. IK has retained an interest of just under 20%.
“We continue to believe in and support the company and
still see important upside potential – the management did a
fantastic job transforming the business. However, securing a
majority exit in the current climate was also very attractive
for us and, essentially, we now have the best of both worlds,”
says Kristiaan Nieuwenburg, Partner IK.
Wehkamp has certainly been a profitable investment for IK:
the firm sealed a high return on its investment, despite depressed market conditions. Nieuwenburg believes the company’s
key selling point is its combination of web-shopping and financial services. “While non-food retailing is never immune from
external economic conditions, Wehkamp has a strong brand, a
large customer base and will benefit further from the overall
growth in online retailing. It is in a much better position than
many high street retailers. Growth may be slower over the
coming year but the business will still grow. The consumer
finance division is also doing well and still has much further to
go in terms of business and product development,” he says.
Wehkamp was acquired by IK from the UK retailer GUS
for €315 million in January 2006. At that time it was a
traditional catalogue retailer with declining sales, heavily
subsidised by consumer credit income which itself faced
increasing competition from new market entrants. Wehkamp
also owned a small debt collection agency called Transfair.
From the outset, IK’s plan was to capitalise on its previous
experience in the home shopping, consumer credit and debt
collection markets and revitalise the entire group. Under the
umbrella of RFS Holland Holding, Wehkamp was divided
into four individual operating companies: Wehkamp Retail,
Wehkamp Real Estate (the property manager for Wehkamp’s
head office and distribution centres), Wehkamp Finance
(now known as Lacent) and Transfair Holding.
Each component company was given its own
“Selling over 55,000 products and
completing about five million
­orders every year, Wehkamp
is Netherlands’ leading online outlet for a huge range
of items – clothing, ­electrical
appliances, ­furniture,
household products,
leisure goods etc.”
Anatomy of
a deal
management, strategic plan and financing. “This improved
reporting introduced accountability at group level and opened
the way to more efficient funding. It also meant that, ultimately, each business could potentially attract different buyers,”
Nieuwenburg explains.
Transfair was essentially a standalone business and had
limited natural synergies with the rest of Wehkamp. Having
developed into an independent debt collection and fledging
credit information and credit management company, Transfair was duly sold in March 2007 to the European credit
management company, Lindorff.
Management, meanwhile, continued to develop Wehkamp
Finance which was formed initially to support Wehkamp’s
retail operation, but had the potential to evolve into a selfstanding, financial services business on the back of the Weh­
kamp brand. Refinanced with a €300 million securitisation
at the end of 2006, management focused on expanding the
Wehkamp Finance product range into, for example, personal
loans, insurance products and debt consolidation services.
Catalogue retailing is traditionally a low-margin business
so the primary growth driver for Wehkamp’s core home
shopping business has been its transition to the internet
through which 85 per cent of its revenues are now generated. Wehkamp is now at the forefront of e-commerce and
the Netherlands’ leading online outlet for a huge range of
items, such as clothing, electrical appliances, and furniture,
household products and leisure goods. It sells over 55,000
products and completes about five million orders every year.
With the business on a solid operational and financial
­footing, IK was approached by the investor group last
­summer with a view to buying the business. “Because of
the possible conflicts we established a clear agreement:
­management had to deliver the price we were asking.
There was no room for manoeuvre. We had our view on the
­valuation and in the end they stuck to it,” says Nieuwenburg.
“Basically, we gave them a shot at buying the business and
they did it,” he continues. Despite the economic downturn in
the second half of 2008, the group continued to perform well
throughout the sales process. The major hurdle in the prevailing ‘credit crunch’ was raising the necessary debt financing
but the deal was ultimately supported by Rabobank.
Overall, IK is pleased to have achieved its growth plan and
believes the separation of the group, with focused management for each business, worked particularly well, as did the
shift from catalogue to online retailing. “This transformed
Wehkamp from a shrinking to a growing business,” Nieuwenburg explains. “When we invested, Wehkamp’s sales were falling. Subsequently, the business developed an average growth
rate of over five per cent per year, while operating profits
have doubled. Wehkamp is now the largest and a highly-rated
online retailer in the Netherlands,” he says.
“Now that the organisation has been completely reshaped,
Wehkamp is well-positioned to capture online growth potential and embark on the next phase of its development. This
is, therefore, a natural time for a change in the ownership
structure,” Nieuwenburg concludes.
What did we buy?
An ‘old fashioned’
integrated ­catalogue
retailer with
declining sales.
A credit business
facing increased
competition.
A small debt
­collection agency.
Why did we buy it?
Deep understanding of the sector
and the know-how
to effect change
through our previous investments.
A belief that the
underlying internet
sales growth was
disguised by declining catalogue
sales.
Conviction that
separating the
retail and finance
businesses and
giving each its own
management team
would benefit the
group.
Insight into the
potential to develop
the debt collection
business with new
products.
Assessment that
value could be
unlocked by selling
the businesses
separately.
Value creation
implementation
Produced a
redefined and
focused online
retail business with
impressive growth
in a difficult retail
environment.
Developed a
stand­alone
consumer finance
­business with
strong credit
book growth
and impressive
improve­ments in
debtor quality.
Successfully
disposed the
Transfair debt
­collection business
after growing it
substantially.
IK NEWS 1/09 – 5
20 YEARS OF IK – PART 1 OF 3
Sunny skies. Anna Linder Lycett, one
of the firm’s first employees who today
is its Treasurer and Compliance Officer
and Mads Ryum Larsen, Partner.
Cool acquisition.
The first Danish
investment,
Hjem-Is
Europa.
fashion-Able.
Lindex, acqui­red
in 1993 and listed
on the Stockholm
Stock Exchange
two years later.
Business by the book.
Liber, a Swedish publisher, was
acquired in 1990 and became
IK’s first exit three years later.
On a roll. Liva Bil was acquired
in 1991 and listed on the Oslo
Stock Exchange in 1993 – IK’s
first IPO.
Kim Wahl and Björn Savén in 1993, just after
the firm had gained independence and was
officially named Industri Kapital.
The Nordic
buyout pioneers
IK Investment Partners started its operations 20 years ago this summer. To commemorate and
celebrate this event, we are running a series of articles in IK News over the coming year. In this
edition, we look back to the first five years when the company took its first steps.
I
t is hard to believe it now, but when IK Investment Partners first
started as a Nordic focused firm, in 1989, private equity funds as
such did not exist in the Nordic region and only in perhaps one or
two locations in Continental Europe. There was plenty of corporate
and financial transaction activity, and smaller buyouts were being done
on a limited scale, either in-house or syndicated to investors on a ‘deal
by deal’ basis, but the concept of raising a third party fund dedicated to
private investments was a pioneering move.
The first fund had Enskilda Securities’ name (SEB’s London-based
investment bank) on the front page, but only money from the bank's
pension funds. “At the time, it was actually illegal for a Swedish bank to
invest in private equity so we had to go via its London Merchant Bank,
and there were all sorts of other restrictions too,” explains Björn Savén,
IK’s founder and Executive Chairman.
From corporate career to private equity entrepreneur
Having worked for Gulf Oil and graduated from Harvard Business
School (HBS) in 1976, Savén did as many young MBAs at the time: he
started working for a large corporate, Swedish-based office products
group Esselte. It is there, after buying a lot of companies for Esselte and
specifically, while selling a non-core division, that he first got the idea:
“With the low prices the industrial buyers were offering, this particular
6 – IK NEWS 1/09
deal would have worked as a buyout, had there been a PE fund there
to provide the equity.” ­Inspiration from, and regular discussions with,
American and British HBS class-mates who went into venture capital
also helped, Björn Savén points out.
The first fund
Savén left Esselte in 1988 to put the infrastructure in place to create
­Enskilda Ventures (as IK was called back then) and the first fund (Scandinavian Acquisition Capital, SAC, later known as the IK1989 Fund). He
worked together with a team from ­Enskilda Corporate
Finance, which included Anne Holm Rannaleet,
who later became IK’s first CFO and was an IK
Partner until she retired in early 2008.
“It was a real challenge just to set up the administrative, legal and financial structure. At the time, there
SAC logotype
were foreign exchange controls in Sweden, there were legal
issues with foreigners owning Swedish companies and there were tax
problems too – all of these had to be overcome,” says Björn Savén.
Writing the private placement memorandum was a challenge. For
instance, there was no track record of previous investments or cases to
write about and no similar PPMs had been written for the Nordic market.
The team also spent a considerable amount of time with investors,
BUILDING AN ORGANISATION:
Anne Holm Rannaleet and Anna
Linder Lycett.
THE FIRST CHRISTMAS PARTY as Industri Kapital at the
Brettenham House office in London in 1993.
GUSTAV ÖHMAN as
a young associate.
lion, in those days equivalent to just
over ECU100 million (ECU beeing the
“It was a real challenge just to set up the administrative, legal and financial predecessor to today’s Euro) in total.
With more money coming in, the team
structure. At the time, there were foreign exchange controls in Sweden,
also expanded, in the firm’s single office
there were legal issues with foreigners owning Swedish companies and
at 26 Finsbury Square in London City.
By early 1991 the firm had seven investthere were tax problems too – all of these had to be overcome.”
ment professionals from all four Nordic
björn savén, executive chairman, ik
countries “We all joined a multi-national
explaining what private equity was and how it would create long term
firm, not a Swedish firm. That made later geogra­phic expansion easier,”
value for them. They focused initially on Nordic institutions, which
says Gustav Öhman.
had relationships with SEB. Most of them, though, were completely
Among the recruits in 1990 were Harald Mix, who had worked with
­unfamiliar with private equity as a concept.
buyouts in the US. Harald was a partner at IK until 2001. Mads Ryum
But the application forms started to come in. Most of them were for
Larsen, the first Dane in the firm, was soon to be joined by Bernd
SEK5 million (€660,000) or SEK10 million but then we got one for a total
Peter­son who worked on the Crisplant deal. Peterson left the firm in
of SEK100 million. “The first close on 11 August 1989 was a great moment
1993 and was then replaced by Christian Lorentzen.
– and that was when we really knew that it was all going to work because
“In the first five years, we were operating in Sweden, Denmark,
people did believe in us,” says Björn Savén.
­Norway and Finland. These countries are similar culturally and
­legally, so investment teams could mix across borders with each­­person
Building a team in London
­speaking his or her own (Scandinavian) language,” Björn Savén reflects.
After the first close, Kim Wahl joined as the first Director and GusActive ownership
tav Öhman as the first Associate. Wahl was a graduate of HBS and
Most European private equity firms that existed in 1989 ­( primarily in
came from Goldman Sachs. Öhman came from Enskilda Securities
the UK, France and the Netherlands) had a venture capital background
in Stockholm. Then followed another intense year of fundraising in
with many smaller investments, most of which today would be characEurope and North America. “We learnt – the hard way – ‘the ­business
terised as club-deals, where each firm held a minority stake. US buyout
of a thousand noes’ as we tried to attract new investors to the fund,
firms had had access to more capital and created ­a n investment style
says Kim Wahl. ­Following a year of fundraising with more than 500
with the PE firm in the driving seat, ­requiring majority, and thereby
­contacts, 23 investors, 22 of them Nordic, signed up for SEK764 mil-
FROM ENSKILDA VENTURES TO INDUSTRI KAPITAL
Enskilda
Ventures
formed, office
at 26 Finsbury
Square in
London City
1988
1989
First close of IK1989
Fund (€50 million)
11 August
First investment: AB
Idesta, Sweden
Final close of IK1989
Fund (€100 million)
Investments: Liber, CSE
Oxford, Graphium
1990
Investments: Liva Bil,
Hjelm-Is/Hemglass
1991
Investments:
Crisplant, Partena
1992
Sale of Liber, the first exit
Preparation for fundraising
for the IK1994 Fund
Organising and planning of
independence from Enskilda
1993
Independence as Industri
Kapital, completed on 19 May
Move to current office at
Brettenham House
Stockholm and Oslo offices
opened
Investments: Guldfynd, Lindex
1994
IK NEWS 1/09 – 7
20 YEARS OF IK – PART 1 OF 3
When two minds think alike.
Björn Savén and Michael Rosenlew.
scratch. Over the next few years several
more investments were made across the
Nordic region. Most were bought out of large
­industrial groups. “It was tricky at the start
since nobody knew us. ­Getting access to the
decision-makers was difficult and few sellers
or ­managers even knew what a buyout was.
Many thought MBO stood for ­‘management
by objectives’, ” says Gustav Öhman. “Management teams were quite ­enthusiastic. They
were often being treated as corporate orphans
or cash cows by their ­parent company with
little attention being g­ iven to their business
so they were intrigued by the idea of ‘being
liberated’ and working with us to build their
businesses” says Kim Wahl.
In 1991, the first investments were made in
Norway (Liva Bil, the local Avis franchise) and
in Denmark (Hjem-Is, ice-cream sold directly
to households). Denmark and Norway were
also new to private equity so gaining confidence from investors and potential portfolio
companies took some convincing.
“People were quite hesitant at the
­beginning. The investment ­community was
suspicious and management teams did not really believe that we could help them run their
business better. I was 26 and fresh out of business school. My colleagues
were quite young too,” says Mads Ryum Larsen.
“­Few sellers or ­managers even knew what a
buyout was. Many thought MBO stood for
­‘management by objectives’.”
Navigating in a deep recession
gustav öhman, partner, ik
active ownership. The team was determined to shape IK into the US
active ownership model. “We had bought a lot of companies at Esselte
and I knew the best way to make acquisitions work was to focus on the
business and ­running it ­better. If we did this, I believed that we would
deliver ­earnings ­improvement and value improvement,” says Björn Savén.
Making the first investments
The first investment was a small Swedish business, Idesta, in which
IK injected €1 million equivalent of equity. The investment had its
­challenges but was also a good learning experience as financial and
legal structures, agreements and documentaions had to be made from
Like so many other success stories, IK owes a bit to good timing. The
team managed to make four investments before the Nordic e­ conomies,
particularly Sweden and Finland, took a nosedive in 1991 with the
subsequent now famous Nordic banking crisis of 1992/1993. Therefore,
having money to spend turned out to be a real competitive ­advantage as
the recession wore on and turned into ­recovery in 1993-95.
The team had tried hard to stay clear of cyclical industries, but
there were still some challenging moments in the early years. Saddam
Hussein’s invasion of Kuwait shortly after the firm bought Europe’s
largest privately owned pilot training school (the Nyge CSE Aviation
investment) gave the young team its first experience of a workout with
an Anglo-Saxon bank.
“The work-out unit’s meeting room was in the ­basement with no
windows and if you wanted coffee you went out and got it at the vending
machine. No milk, no sugar,” recalls Kim Wahl.
CRISPLANT – SETTING ‘VALUE BUILDING STANDARDS’ IN THE NORDIC REGION
In 1992, IK invested €14.3
­ illion in a Danish sorting business,
m
Crisplant. Just a few years later,
IK realised €236 million from this
company, making it IK’s most
­successful investment to date.
8 – IK NEWS 1/09
“Crisplant delivered a return
of 16.5 times,” says Mads Ryum
­L arsen, Partner, who at the time
was an associate working on the
deal.
The company designed and
built advanced sorting systems for
airports, post offices, newspaper
plants, warehouses and other
organisations. It also supplied
equipment to fill LPG cylinders in
emerging markets.
Crisplant had been part of a
large corporate and it
had been
left to flounder. But IK
worked closely with the
company’s ­management
and helped it to adopt a more strategic approach to its business.
“We developed the company so
that, i­nstead of taking a projectby-project ­approach, management
looked to the future more and made
sure it got repeat orders from customers,” says Mads Ryum Larsen.
­Following the unification of Germany, Crisplant won a contract
to upgrade postal sorting services
­throughout former East ­G ermany.
The contract was the largest
“Crisplant delivered
a return of 16.5 times”
mads ryum larsen, partner, ik
­ risplant had ever won and it
C
­c atapulted the group into a new
league.
IK supported the management
team in developing the business
at this challenging time and in
1995, the company underwent
a partial IPO, when 35 per cent
of the ­s hares were listed on the
­C openhagen Stock Exchange. In
1999, the entire business was sold
to UK engineering group FKI.
By that time, it was supplying
sorting systems to internet-based
companies, such as Amazon.
“It was an early beneficiary of
the dotcom era,” says Mads Ryum
Larsen.
IKARE THE SOS CAMPAIGN
“The work-out unit’s meeting room was in
the basement with no windows and if you
wanted coffee you went out and got it at
the vending machine. No milk, no sugar.”
kim wahl, partner, ik
Having well-known local investors and the Enskilda
name on the door also helped, as it provided a degree of
comfort to banks, vendors and management teams. It did
not always help, though.
“At one point, the main board of a large Nordic bank
stopped a credit already approved in writing by the
credit committee. Too much goodwill and no assets, they
explained. Later we figured out that as Scandinavia went
into its 1992/1993 banking crisis there was no money to
lend,” the team analyses.
Organisation-building
An important milestone for IK was the sale of Swedish
publishing business Liber in 1993. “It was our first exit.
We made a very good return on it so it ­proved to our
investors – and to us – that Nordic private equity really
could work,” says Björn Savén. Later this year Liva Bil
was listed on the stock exchange in Oslo – the first IPO
which again broke new ground for IK.
“In 1992, the Swedish banking crisis erupted, just as
we were planning to raise money for our second fund.
SEB was no longer able to support this fund even from
its pension funds so we made our own MBO on 17 March
1993,” says Björn Savén.
The spring of 1993 was a hectic time for the firm and
former Finnish slalom champion Michael Rosenlew joined
the team. ­Preparations for fundraising for the second fund
had started, progress on value creation plans at port­
folio ­companies was monitored, new acquisitions were
­evaluated and exits were being planned. At the same time
the three most senior executives, Savén, Wahl and Mix together with Holm Rannaleet were busy creating a parallel
legal structure and getting investor consent for the move
into independence, which allowed IK’s own buyout to be
completed on 19 May 1993. The administration involved
everything from setting up new bank accounts, finding
new offices, to getting business cards printed and deciding
on the new name and logo.
“It was very hard work but it also helped us to understand how portfolio companies feel when they go through
a buyout while ensuring business as usual” says Anne
Holm Rannaleet.
Gaining independence as IK
On 28 May, the team left the London offices of Enskilda
Securities for the last time, moving into premises in
­Brettenham House at the north end of Waterloo Bridge,
where IK still has its London base today.
Thus Industri Kapital – an independent private equity
operation whose name highlighted the firm’s focus on and
understanding of industry combined with financial expertise – was born. The management company was ­owned by
the three partners Savén, Wahl and Mix and these three
were also the informal management committee, although
all investment recommendations were decided jointly by
investment professionals. There were now a total of 13
employees with full dedication to making ­Industri ­Kapital
a success. By the fall of 1993, IK also formally opened an
office in Stockholm.
ROLAND WERE, proud veterinary drug store owner.
Bringing private veterinary
services to untapped markets
T
he close links between
IKARE. In February, the young vets
animal health and human
also received some basic business
health and wealth have been training, such as simple modelling,
highlighted by the recent
the difference between income
outbreak of foot and mouth disease
and cash flow statements and the
in 12 districts in Northern Uganda,
importance of inventory stocktaincluding five districts where IKARE
king, from Insead MBA Pierre-Loup
is waging a campaign against sleeping
Lesage while on a temporary IKARE
sickness. The districts are under quaassignment in Uganda to document
rantine, which means animals cannot
and validate the project.
be treated or slaughtered, milk cannot
Two of the vets, Ronald Were and
be sold and farmers cannot rent or
Patrick Opondo have opened practices
lease oxen for ploughing. As dispoof their own and the others are soon to
sable income is down children are
follow. IKARE will be providing small
being taken out of school and there
scale, start-up financing to support
is less money to spend on pre-emptive
them in the initial six-month period.
drugs for animals, including the spraying against sleeping sickness.
The picture is not entirely bleak,
however. Since the start of the 3 V
Vet project last May, nearly 60 spray
teams are now active in the area. The
aim of this 8-month scheme, financed
by IKARE and CEVA Santé Animale,
was to put a platform in place
to ensure continued messaging
3 V VETS receiving basic business
on sleeping sickness prevention
training from Pierre-Loup Lesage,
and continued availability of
MBA, Insead.
drugs. “During this period,
all five 3 V Vets have came to
identify an untapped market for
veterinary services and business
plans were jointly developed to
set up veterinary practices and
drug stores in the region,” says
Anne Holm Rannaleet, Director,
“All the 3 V Vets have
developed business plans
to set up veterinary practices in the region.”
IKARE
IKARE (pronounced “I care”) is an independent charity, founded in 2006 by a group of
IK partners. It aims to superimpose private equity investment techniques and business
experience onto the causes it is supporting, thereby contributing more than just funding.
IKARE’s resources are currently fully dedicated to the Stamp Out Sleeping sickness
­campaign, launched in Kampala, Uganda in 2006.
IK NEWS 1/09 – 9
COMPANY PROFILE SOUMEN LÄHIKAUPPA
A WARM WELCOME. Leena Saarinen, President and CEO,
launched the new brand image in December 2008. The move
attracted a lot of positive publicity and was warmly welcomed
by staff members, consumers and advertisers.
Shopper’s delight
A growing demand for shopping close to home as well as a growing concern for
ethical issues prompted an IK-backed Finnish grocery chain to clarify its strategic
focus. Now, the company is focused utterly on the consumer and has changed its
name to Soumen Lähikauppa – ‘Finland’s Local Store’.
I
n recent years, it became obvious that Suomen Lähikauppa needed to change. The grocery store, formerly known
as Tradeka, had lost touch with its most important
stakeholder, the customer.
At the beginning of 2008, the group, which is majority
owned by IK, undertook a strategic review and several major developments ensued. The company changed its name,
its logo and its headquarters. Each move was prompted by
the realisation that, in order to succeed in the 21st century, Suomen Lähikauppa needed to re-connect with the
consumer.
10 – IK NEWS 1/09
IK was closely involved in the transformation.
“We have worked with Suomen Lähikauppa since 2005,
when we invested in the business and helped to bring about
the merger of two Finnish grocery chains, Suomen Lähikauppa and Wihuri Group,” says Michael Rosenlew, Managing
Partner, IK and Chairman, Suomen Lähikauppa.
“Since then, we have been actively involved in developing
the company and driving the strategy forward. A new management team that share our vision for the business has been
appointed. Like us, they understand that a retailer needs to
focus on the consumer to succeed,” he adds.
Finland’s consumer goods market is concentrated on a few
key players. Suomen Lähikauppa is the third largest company
in the sector, but, with its 12% market share, the company
made a strategic choice not to challenge the two major retail
chains on every front. Instead, it decided to focus on a sector
where it already has a leading position: cosy, neighbourhood
shops of less than 400 square metres.
This decision was well-timed. Climate change and
neighbourhood services are at the forefront of consumers’
minds and local shops are becoming increasingly popular,
­particularly in Finland. “Since we already run about 680
­local shops across the country, it was a natural choice to
focus on that segment,” says Leena Saarinen, president and
CEO, Suomen Lähikauppa.
As in most countries, neighbourhood shops used to be a
­t raditional feature of the Finnish retail landscape. Then,
during the 90s and early 00s, hypermarkets came into
fashion and local shopping services declined. Now the tide
is turning again and in the past few years, more small shops
have been opened than closed.
“According to several studies, Finns would ideally prefer
their closest shop to be closer than it is today,” Saarinen says.
Suomen Lähikauppa’s strategy is based on the company’s
mission – ‘to help people be happy and content in their
­day-to-day lives, wherever they live’. For that reason, several
issues, not just growing demand for local shops, helped to
determine the company’s strategic focus.
Shopping locally is not just convenient but ecologically sound
as well. A recent study conducted in the Finnish town of Tampe-
ETHICALLY SOUND. Siwa’s bananas,
pineapples and oranges are 100%
Fair Trade. Valintatalo was awarded a
prize by Finnish organic producers for its
environmentally-friendly approach and the
chain has begun to certify its shops with
the official Nordic ecolabel the Swan.
consumer. This lies at the heart of the
company’s new strategy. “The new
consumer-driven ­approach is demonstrated, for example, by the reversal of
the value chain so that the company’s
activities start with what the consumer
wants rather than what we or our suppliers want to give them,” says Rosenlew.
Suomen Lähikauppa has worked hard to find out more
about customer preferences, conducting detailed studies into
local consumers across Finland. The company even set up
an online consumer panel called Neuvonantajat (Advisers).
Even though the panel only has been in use for a few months,
it is already highly successful.
“More than 4,000 people have gone online to tell us what
they want from a local store. Now we are aiming to use this
intelligence to maximum effect. Our ultimate goal is to give
each shop its own local flavour, with products, services and
opening hours that suit customers in that particular area,”
Saarinen says.
Across the board, consumers consistently ask for Fair
Trade products. And, as a result of the new strategy, ­
Suomen Lähikauppa’s shops are offering them just what they
want. The company has three brands, Siwa, Valintalo and
­Euromarket. Siwa recently became the first food retailer
to stock only Fair Trade bananas. Today its pineapples and
oranges are also 100% Fair Trade. Valintatalo was awarded a
prize by Finnish organic producers for its environmentallyfriendly approach and the chain has begun to certify its
shops with the official Nordic ecolabel the Swan Valintalo is
the only Finnish retailer with this certificate.
For Suomen Lähikauppa, a sustainable, local and
consumer-driven approach to business development is the
way forward. As for the company’s prospects, Saarinen says
simply: “You haven’t seen anything yet. We’ve embarked on
a long journey and we are just at the beginning of the road.
There’s still a lot to do.”
“A recent study conducted in Tampere, Finland, showed
that shopping in hypermarkets is three times more of a
burden on the environment than shopping locally.”
re, Finland, showed that shopping in hypermarkets is three times
more of a burden on the environment than shopping locally.
“Our choice to concentrate on neighbourhood shops was
guided by people’s desire for local services and public concern for issues such as climate change,” Rosenlew says.
Besides offering a local service, Suomen Lähikauppa’s
clear competitive advantage is its ­u nderstanding of the
LOCAL PLAYER. Soumen
Lähikauppa made a strategic
choice to ­focus on a sector
where it already had a leading
position: cosy, neighbourhood
shops of less than 400 square
metres.
A consumer
driven a
­approach
Third largest
player in Finland’s
grocery sector.
Leader in the
neighbourhood
store market.
Changed its name
from Tradeka to
Suomen Lähikauppa Oy on 29
December 2008.
Has three shop
chains: Siwa,
Valintatalo and
Euromarket.
Has approximately 760 shops and
7,200 employees.
Group net sales in
2007 amounted to
€1.4 billion euros.
IK Investment
Partners owns
65.5% of Suomen
Lähikauppa Oy.
Other shareholders are the
Co-operative
Trade Corporation
(15.6%), Wihuri Oy
(15.6%) and the
current management (3.3%).
IK NEWS 1/09 – 11
IN FOCUS TOM VON WEYMARN
Self-regulation vs
regulatory overkill
Tom von Weymarn, Senior Advisor, IK, an expert on corporate ­governance, hopes the
economic downturn will not lead to punitive regulation from authorities. “I sincerely hope
self-regulating reform will pre-empt ­regulatory overkill from the authorities,” he says.
T
om von Weymarn has worked
with IK since 1992 and has
been a senior adviser for
many years. He is one of the
most respected board professionals in
Finland, renowned for his international corporate governance expertise.
von Weymarn chairs three ­Finnish
­companies, TeliaSonera, Turku Science
Park and Lännen Tehtaat, and is
member of the boards of Pohjola Bank,
Hartwall Capital, Sibelius Academy
and Hydrios Biotechnology. IK News
asked him how he believes the economic downturn will affect corporate
governance and fundamental business
practices.
Do you see any connection between the
current financial crisis and corporate
governance?
The ongoing crisis is a super-bubble
that has developed since the 1980s,
fuelled by the ever-increasing use of
credit and leverage. Credit – whether
extended to consumers, speculators
or banks – has been growing faster
than GDP since the Second World War.
Financial engineering became so mindblowingly complex that regulators
could no longer calculate the risks and
came to rely on the risk management
models of the financial institutions
themselves. To their detriment and
the detriment of millions of investors,
credit-rating agencies followed a
similar path.
Now regulators are trying to gain – or
regain – the upper hand and a cat-andmouse game has developed between
them and the financial market.
I believe financial engineers will
always find a way to do what they
want to do, irrespective of corporate
governance. But I also believe regulators are responsible for preventing
financial markets from getting out
of control and they must accept that
responsibility. Until now, the authorities have explicitly failed to do so.
What future developments would you
like to see in corporate governance?
Companies’ internal control systems
need to be more rigorous. Every
board must understand what risks its
­business is taking and the consequences of those risks. Of course, risk is an
integral part of commercial life but
there needs to be a healthy balance
between risk, reward and a company’s
resources, its equity.
In the past, those working in the
financial markets were incentivised
to take more and more risk for less
“Regulators are responsible for preventing financial
markets from getting out of control and they must
accept that responsibility. Until now, the authorities
have explicitly failed to do so.”
12 – IK NEWS 1/09
IN FOCUS
Who: Tom von
Weymarn
Where: Finland
What: Senior Advisor
Why in focus:
Senior Advisor to
IK, Chairman of the
Board of TeliaSonera
Ab, Turku Science
Park Oy and Lännen Tehtaat Oyj.
­M ember of the
board of Pohjola
Bank plc, Hartwall
Capital Ab, Sibelius
Academy and Hydrios Biotechnology
Ab (as of February
27, 2009).
and less capital. They were rewarded
upfront and the downside of the risks
they had taken only materialised much
later. This has to change. Rewards have
to reflect risk more accurately.
Financial engineering must be
regulated too, so new products
should be registered and approved
by the appropriate authorities before
they can be used and margins and
­m inimum capital requirements must
be tightened.
What are the differences in corporate governance between the
Anglo-Saxon countries and
Continental Europe?
Power in the US and the UK
lies p
­ rimarily with the chief executive. In the US, the CEO is often
chairman of the board as well. In
­Continental Europe, every ­country
has its own corporate governance
code. In ­Scandinavia and the
­G erman-speaking countries, there is,
in my view, a better balance between
owners, managers and the board.
How do you see private equity
develop­ing in the future, with
­regards to corporate governance?
The private equity industry will
­c ertainly be subject to a tighter
­r egu­l atory framework, thereby
losing one of its major competitive ­a dvantages. Some PE-owned
­b usinesses may be unable to meet
their obligations as creditors, so
bank lending will become more
expensive, demand for equity
will increase and governance will
­b ecome tighter. The business model
for ­private equity will survive, but
­c onditions will change – we will­
­r eturn to the environment that
­e xisted in the early days of PE.
What are the challenges of being
listed versus being private?
Listed companies have to adhere to
laws and codes and publish f­ inancial
updates each and every quarter.
The media are watching their every
move and are intensely critical of
RISKY BUSINESS. According to Tom
von Weymarn, companies’ internal control
systems need to be more rigorous. “Every
board must understand what risks its
business is taking and the consequences
of those risks,” he says.
“The private equity industry will
be subjected to a tighter regulatory
framework. Some PE-owned
businesses may be unable to meet
their obligations as creditors so bank
lending will become more expensive,
demand for equity will increase and
governance will become tighter.”
any development that does not
meet their expec­t ations. If listed
companies make a decision that the
market ­d islikes, their stock price
is ­i mmediately ­p enalised. Listed
­companies’ are also attacked and
­m anipulated by hedge funds and
other activist investors. Non-listed
companies can plan and act with
much more freedom. There is much
more scope for long-term ­t hinking
and value creation in ­non-listed
­companies today.
What are your fears and hopes for the
next coming years?
In view of the tremendous losses
­suffered by the general public, there
is a real danger that we will end up
with punitive regulation. That would
be unfortunate as external regulation
is invariably less efficient than selfregulation, driven by the market for the
market. I sincerely hope self-regulating
reform will pre-empt regulatory overkill from the authorities.
IK NEWS 1/09 – 13
INSIDE IK
ON LOCATION/VASALOPPET
“In the footsteps of
our forefathers…”
O
n February 22, 6,600 skiers set out to
­complete the Öppet Spår (‘The Open Track’)
part of Sweden’s Vasa Cross Country Ski
Race – Vasaloppet. Among those were ten
courageous skiers from IK. Some of them experienced
skiers, some hearty amateurs, and all keen to ski
ninety kilometers under the device in the footsteps
of our forefathers for the victories of tomorrow. IK’s
Partner Gerard De Geer, participated in the race for
the eleventh time.
“I used to ski to school when I was little. But in spite
of my experience this race made me a little worried,
since the weather forecast didn’t look too good,” he
said. Immediately after start, the sky opened up and
let down heaps of snow. In less than thirty minutes
ten centimeters fell. With a lot of fighting spirit all ten
from IK completed the ninety kilometers. First to goal
was Gerard – of course - who made the distance in
eight hours and thirty-four minutes.
“I am proud of my colleagues, who
with little cross-country skiing
experience succeeded in one of
the most gruesome Vasa Cross
Country Ski Races ever. Difficult
conditions could not stop us!”
says Gerard de Geer, Partner, IK,
who participated in the race for
the eleventh time.
From Sälen to Mora
Thousands of cross-country skiing enthusiasts meet every year
to cover the ninety kilometers between Sälen and Mora. Vasaloppet, the world's longest and largest cross-country ski race,
was inspired by king Gustav Eriksson Vasa who did the same
run in 1521. Today the race is divided into nine separate races
during ten days. 48,000 competitors start out accompanied by
cheers from 100,000 spectators and media.
“I definitely need more practice
to keep up with the Nordics,
but I want to beat them at their
own game eventually,” says Gijs
Marbus, Associate, IK.
AWARDS
Anne Holm Rannaleet
receives SVCA’s Hall
of Fame award
Nordic private
equity firm of the year
IK has won Private Equity News award “Nordic Private Equity firm of
the year”. A distinguished panel of more than 160 institutional investors,
advisors, financiers and senior private equity practitioners from across
Europe have voted on the nominated firms in each category. IK’s Partner
James Yates collected the award on behalf of IK at a ceremony on 30
March 2009 at Banqueting House, Whitehall, London.
14 – IK NEWS 1/09
The private equity pioneer and Chairman
of IK Industrial Advisory Board Anne Holm
Rannaleet has won the SVCA newly instituted award Hall of Fame. Anne ­received
the award for her exceptional contribution
and angagement, through SVCA and EVCA,
in matters of key importance for the private
equity industry. She is also actively
working to improve transparency
and openness for trustworthiness
of the private equity industry
(see Viewpoint, page 16). Anne
received the award at SVCA’s
private equity conference held
on the 25 of March this year.
INSIDE IK
GREETINGS/HARVARD
HOT SPOT/WARSAW
The IK Finnish American scholarship recipient 2008
Looking back at
the first semester
The topics we have studied have ranged from the business
models of Japanese restaurants to the profitability of ­baseball
franchises, reports IK Finnish American Scholarship
­recipient Antti Hovila.
I
have now been in the MBA program at Harvard Business School
for six months. The time has flown
by and it now seems like a natural
moment to pause for breath, take
stock and look back at what I have
learnt during my first semester. So far
it has been hectic but fascinating.
The MBA programme lasts for two
years and the first year is made up
entirely of compulsory courses, so
there is a lot of extremely hard work.
The courses are all taught via ‘cases’,
real-life business situations, where
decisions had to be made in order
to help businesses make progress
and r­ esolve their difficulties. The
topics we have studied so far have
been ­really diverse, ranging from
the choice of business models in
Japanese restaurants to operational
­excellence in car-making and from the
profitability of baseball franchises to
partnership challenges in developing
semi-conductor technologies.
Many of our case topics have been
highly relevant to current events and
the global economic downturn. On
the day of the US presidential election,
for example, we looked at how Barack
Obama’s campaign used the internet
and various social networking tools to
reach new groups of potential voters.
In our finance classes, we have ­studied
sub-prime mortages as ­potential
investments and we have also looked at
what was lacking across different parts
of the US mortgage loan value chain
over the past few years.
I can’t think of a better way to learn
about business and current affairs,
and I am very grateful for the IK Finnish American scholarship, as it has
given me this wonderful opportunity
to study at Harvard.
Warm regards from Boston,
Antti Hovila,
the ik finnish american
scholarship recipient 2008
“Many of our case topics have been highly relevant
to the times we live in. I can’t think of a better way
to learn about business and current affairs.”
SylWester Urbanek,
Associate Director, IK
“Something for everyone”
Warsaw has been one of Europe's fastest
­growing cities. In today’s gloomy financial
market is that still the case?
With a certain delay to Western Europe, Warsaw,
as well as the entire country, is starting to feel the
unavoidable slowdown, but will be less affected
compared to most other CE countries.
How would you describe the business climate
in Warsaw at the moment?
A number of vital public projects are to be realised. Warsaw will host the most important events
during the EURO 2012 Football Championships.
With those events in mind, hopefully necessary
investments, co-funded by the EU, will help to
stimulate business and economic environment.
What would you recommend someone to do
when visiting Warsaw?
Warsaw is definitely attractive both for
­sightseeing and
shopping, and even
more so recently,
due to the fact that
Polish zloty has
depreciated over
30% compared to
the Euro. The city
has something to
offer every visitor –
historic places, museums and galleries, quality
clubs for evening fun and big shopping malls.
What is the spot not to miss when there?
I have a few favorite places – the Old Town
with the Royal Castle, the city’s parks including
’­Lazienki’ and ’Wilanow’. And genuine Polish food
at high quality and priceworthy restaurants.
When is the best time of the year to visit?
For those who are not afraid of snow, winter is
nice, especially around Christmas time. Summer
is usually very sunny with hot evenings. Good
weather often continues until September, which
we Poles call ’Our Golden Autumn’.
IK NEWS 1/09 – 15
Anne Holm Rannaleet. “Private equity can be part
of the solution in helping the EU through this
period of unprecedented uncertainty.”
The proposed EU Directive on Alternative Investment
Fund Managers has recently been published. None of
the major reports covering financial regulatory reform,
including de Larosière and G20, have identified private
equity as posing systemic risk. Therefore, it is difficult to
understand why, at a time of capital scarcity, an owner­
ship model providing long-term capital, alignment of
interest and investor transparency should be subject to a
regulatory model designed for short term trading funds.
Already regulated in many areas of Europe, we are as an
industry not against regulation as such, but it needs to be
fair, appropriate and proportionate.
Over the last few months, the European private equity
industry has come together like never before; to pool
resources and know-how in order to respond to the political concerns raised by European policy makers in their
efforts to analyse and understand the possible impact of
the various actors within the financial services sector on
financial stability and systemic risk.
This massive task of documentation and technical
analysis of the private equity business model and current
regulation, contractual arrangements with investors and
industry standards across Europe, began in earnest in
October 2008. Then, an industry Representative Group,
comprising of some 30 representatives from both buyout
and venture capital funds, European and national venture capital associations, advisory firms and investors in
the industry was created. The Representative Group formed a smaller group, the so-called Brussels Task Force,
with the assignment to give a formal response to the
European Parliament’s Resolutions on hedge funds and
private equity and support the European Commission
with facts and data in formulating EU policy outcomes.
Having served as the representative for the Nordic
countries’ and mid-market buyouts on this Task Force,
I have been impressed by the industry’s willingness
to come together and act like an industry. Our joint
response to the European Parliament and European
Commission was made public on February 26, 2009 at a
European Commission public hearing on private equity.
It may have taken some time for our industry, to
fully appreciate how little has actually been known and
understood by the general public and policy makers on
how we operate and create value. We now recognize that
much of the debate has been carried and continues to
be borne by emotional arguments based on perceptions rather than facts. I would like to believe that the
industry’s sensors for what drives public debate have
improved as a result of this exercise. Our response and
continued engagement in policy making will hopefully
not only help people enhance their understanding of
the private equity industry and the vital role it plays in
providing long-term financing to companies of all sizes
and development stages, across all sectors and regions
of Europe but also enable us to remain engaged in the
continued development of the European economy.
Private equity as represented by buyouts and venture
capital, with its proven strong corporate governance
and alignment of interest model, can definitely be part
of the solution in helping the EU through this period of
unprecedented uncertainty.
As also stated in the Response, the industry is
prepared to commit to the continued improvement of
professional standards based on existing EVCA and
national association codes, and a set of supervisory
arrangements. We will remain engaged with our policy
makers at both national and EU level, so that in the
development of a the European regulatory and supervisory framework covering all sectors of the financial
industrywe can try to ensure that it takes due notice
of existing national legislation, industry codes and
practices and investor relationships, as well as the lack
of systemic risk posed by our industry. The framework
must further reflect the fundamental differences that
exist between private equity and eg. hedge funds but
also across the different sectors of the private equity
industry (buyout, growth and venture capital) and
should also ensure a level playing field with other business acquirers and other private owners.
That said, I still believe that the industry can only benefit from a greater general understanding of how we
operate and a higher level of engagement with larger
groups of stakeholders.
anne holm rannaleet, ex partner & today
senior advisor, ik.
Viewpoint
“The E
­ uropean
private ­equity
industry is
­prepared to
commit to
­the continued
improvement
of professional standards
through the
­development
of a unified
Europeanwide set of
­standards.”