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Record attendance at Mergermarket's annual Nordic conference did not hide it's been a disappointing start to the year.
Mergermarket, the leading provider of M&A data and intelligence, has released research showing that the Nordic region in the year to date 2019 has experienced its lowest deal value (EUR 6.8bn) since the same time period in 2013.
The Nordic decline mirrors what has been seen across the rest of Europe, which is on course to post one of the least active first quarters since the financial crisis, having been heavily impacted by growing levels of economic and geopolitical uncertainty across the continent.
The data was announced at Nordic M&A and Private Equity Forum held in Stockholm on 28th March.
Video: Event summary in under three minutes
Jonathan Klonowski, Research Editor EMEA at Mergermarket commented: “While many of the fundamentals behind recent buoyant activity remain, the Nordic market has followed wider European trends with a slow start to the year. Dealmakers will be hoping that the abundance of innovative assets in the region results in an uptick in the coming months”.
Inbound M&A in 2019 continues to outpace outbound deal values, generating EUR 5.4bn compared to EUR 1.6bn. Inbound M&A deal value was also up significantly in the year to date to EUR 5.4bn compared to EUR 2.1bn in the same time last year. In addition, Chinese investment into the Nordics has continued to be active, with four deals worth a combined EUR 1bn of investment in the year to date 2019 compared to seven deals across the entirety of last year.
Anders Malmström Partner at DLA Piper commented: “We still see high activity in the market and even though the number of deals was slightly lower for us in Q1 2019, we are now working on a large number of deals. We continue to see significant activity within the technology, fintech and infrastructure sectors, and we foresee structural changes in certain sectors, such as companies developing residential properties".
Industrials & Chemicals remained the best-performing sector in 2018, capturing 22.9% of last year’s market share in terms of value. Deal value in the sector rose to EUR 19.7bn in 2018 compared to EUR 10.5bn in 2017 despite a slight drop in deal count – 230 versus 246 in 2017. This year has started in a similar fashion with the 51% sale of National Electric Vehicle Sweden to China’s Evergrande Health Industry Group for EUR 813m, a prime example of recent investment into the Nordics.
Telecommunications surged to EUR 15.3bn in value in 2018 from only EUR 655m in 2017, due primarily to deals such as DK Telekommunikation and TDC A/S (worth EUR 8.5bn) as well as Tele2 AB and Com Hem AB (worth EUR 3.7bn). In 2019 so far, the highest deal value was in financial services with three top deals in the sector, which were Euronext NV/Oslo Bors VPS, Nasdaq and Oslo Bors VPS and the Arne Wilhelmsen family and Awilhelmsen.
The region’s equity capital markets saw a fractional decline in the number of IPOs that took place last year, with 58 such listings raising a combined EUR 4.0bn. A year earlier, 86 listings took place totalling EUR 5.3bn. Sweden was the most active country in the region accounting for 39 IPOs worth EUR 1.2bn last year. However, in the year to date, offering size in the region saw a sharp decline to EUR 39m compared to EUR 1.7bn in the same period last year.
Spin-off activity remains buoyant throughout Europe, and the Nordic region has become a European carve-out hot spot. Activists have been a driving force behind the trend and this year, Norway has seen one such investor, Constructive Capital, schedule talks with the government over separating mobile masts from state-controlled telecom operator, Telenor. In Sweden, Telia is considering a separation of its domestic network infrastructure assets while Denmark’s AP Moller Maersk has initiated spinning-off its Maersk Drilling business to shareholders.
Nordic private equity buying power became more robust last year as fundraising levels have reached new heights in Europe, consequently leading to strong activity. However, the EUR 242m spent so far this year on buyouts represents a downturn compared to this time last year, when EUR 1.4bn-worth of such activity was recorded. Private equity-led exits painted a slightly different picture with EUR 1.4bn in deal value, a much better start to the year compared to 2018, when there was only EUR 793m worth of exits in the same time period.
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