Nordic Private Equity Performance - Do Nordic Private Equity funds outperform public markets, and how do they compare to their global counterparts?

Sammanfattning: This paper sets out to examine the cross-sectional performance of Nordic Private Equity funds. More specifically, the paper aims to evaluate the performance of the buyout and venture capital funds with vintages 1994-2012, and assess it in relation to relevant benchmarks in order to appraise the value creation potential as compared to public markets, and global competitors within the field. The performance is measured using both conventional return and PME metrics, and also a novel Time Weighted Return-based measure devised in the paper. The studied sample consists of 2,224 records with one or more observable performance measures, out of which 75 are attributable to the Nordic region. The synthesized analysis indicates an outperformance by Nordic buyout funds in relation to public market equivalent investments. Its significance and magnitude are however sensitive to assumptions with regard to risk adjustments. The Nordic venture capital funds on the other hand exhibit strong underperformance. A similar pattern can be observed in the regional comparison, with Nordic buyout funds exhibiting statistically significant outperformance as compared to European and US-based peers on the basis of absolute performance metrics, such as the Internal Rate of Return. Venture capital funds show underperformance on the basis of PME abnormal returns. Lastly, the paper finds evidence of a robust relationship between the performance of Nordic funds, the fund type, and relative vintage.