Inflated Markets Cut Investment Pace at $6 Billion Altor FundsAdam Ewing
Altor Equity Partners AB, with $6.2 billion in assets under management, said it will be wary of making investments this year as asset prices soar.
The private-equity firm expects to make three to four purchases in 2015 in “pockets of value” because of “caution around current valuation levels,” Managing Director Harald Mix said in a March 12 interview at the company’s Stockholm headquarters. “We’re probably going to be below our normal pace. We’re not looking at a super-investment year.”
Low interest rates and central bank stimulus helped boost the Nordic market for mergers and acquisitions and initial public offerings last year to its highest level since 2000. While valuation multiples historically have been between 9 to 10 for earnings before interest, taxes and amortization, today’s market demands as much as 13 times, which is “quite a jump,” Mix said.
The European Central Bank’s quantitative-easing program and depreciating local currencies are likely to set the stage for a “strong” year also in 2015, Adam Kostyal, head of European listings at Nasdaq OMX Group Inc., said last month.
Altor listed online IT products distributor Dustin Group AB on the Stockholm exchange on Feb. 13 and bought a majority holding in Norican, a Danish industrial parts maker, in December. Current holdings include Sweden’s Carnegie Investment Bank, French ski equipment maker Rossignol Group, Norwegian clothing company Helly Hansen and Orchid Orthopedic Solutions of the U.S.
The private-equity company isn’t planning to exit its almost 80 percent holding in Carnegie, Mix said, adding there is still “more to do.”
Mix expects underlying profits among Altor’s portfolio of 27 holdings to improve by at least 10 percent this year. Those gains, continued high multiple levels and decent dividend yields and cash flow should “fuel the public market,” he said. Sweden’s benchmark OMX Stockholm 30 index rose 9.9 percent last year after climbing 21 percent in 2013.