Goal

Average annualized return (IRR) of 20 percent or more on realized investments before administrative expenses, over a business cycle.

Strategy

• Drive and develop current investments.
• Invest in new attractive companies with sizeable value creation potential.
• Successfully exit holdings as the markets permit.

Investor Growth Capital

Investor Growth Capital takes minority positions in growth companies. These companies are often generating revenue or soon will be. This type of investments poses relatively high risk, mainly related to operations, as the holdings are in development and growth phases. To balance such risks, Investor Growth Capital has a large number of holdings in its portfolios. Typically, these holdings have no or very low financial leverage. Returns are generated through divestments. Typical exits include initial public offering or trade sales to industrial or financial players, normally after a three to seven year holding period.

Valuation
Given that holdings are normally in rather early development phases, they are often valued based on the latest externally priced financing round, or, for investments made within the last 12-month period, the acquisition amount. Where applicable, peer  group multiples are used. Liquidity discounts are also applied. The use of peer multiples instead of acquisition multiples, that would typically include a premium for synergies, combined with liquidity discounts imply that companies in exit processes are undervalued. Historically, only a handful of companies have been exited from these portfolios at prices below the value established in the preceding quarterly report.

Investment Strategy

• Small and medium-size growth companies in the U.S., Northern Europe and Asia.
• Minority ownership for strategic influence.
• Mainly unlisted companies within healthcare and IT.
• Ownership horizon 3-7 years.
  

EQT

Partly owned EQT makes leveraged investments in medium to large-sized companies that show development potential. With many holdings being relatively mature, operational risk would generally be more limited compared to that in many Investor Growth Capital holdings. However, with EQT using substantial leverage, financial risk is normally clearly higher. EQT is independent from us, with its own investment committees and decisionmaking processes, although, we sponsor all of its funds. This means that we commit capital early and receive a disproportionate share of the returns.

Valuation
Valuation is to a large extent based on multiples, as holdings are typically more mature and relevant peers are more often readily available.

Investment Strategy

• Levereged buyout investments in Northern Europe, China and the U.S.
• Majority ownership.
• Ownership horizon 3-7 years.

Information updated 2010-04-07 14:57:27