Altor Equity Partners has been an active private equity firm in the Nordics and DACH regions for the past two decades. Despite seeing the industry go through peaks and troughs, Altor has remained a mainstay of the flourishing Nordic PE scene. 

The Stockholm-headquartered sponsor is now on a mission to capitalise on the latest and most promising trends in the buyout and growth capital space.

Green transition 

Altor invests across the business and financial services, consumer, industrial and tech sectors, but despite this, the GP believes the biggest investment opportunity in this century will be the fight against climate change. Additionally, the firm views itself as an entity helming a community of challengers and change-makers. 

“We have previously invested in onshore wind development, solar and batteries, and this is the area where we think there’s going to be tremendous opportunities in the future,” says Klas Johansson, co-managing partner at Altor. 

The opportunity also builds on the GP’s legacy of concentrating on industrial companies – which has been their focus since inception – and are now witnessing a “monumental shift” from brown to green, he adds.

Some of the firm’s recent investments in the green transition space include Denmark’s FLSmidth, which decarbonises cement; OX2, a global onshore and offshore wind developer that it exited recently after a three-year holding period; and Kommunalkredit, a bank funding green transition project. 

Sweden domicile 

Altor, which closed its most recent fund in 2019, dedicated its initial period as an active fund focusing on expanding its Nordics expertise. Five years ago, the firm started to focus on German-speaking countries and has since backed a number of investments. 

But unlike a lot of private equity firms, Altor’s funds have been domiciled in Sweden as opposed to traditional jurisdictions such as the Cayman Islands, Luxembourg or Jersey. The firm has been quite satisfied with its decision because it allows it to be closer to its fund operations and more importantly, the Nordics- and DACH-based companies that it invests in, so it can understand and relate to their investment structure more easily compared to other domiciles.

According to media reports, some 278 private equity funds are active in Sweden itself. In that context, Johansson believes the firm has managed to differentiate itself because the GP thinks outside of the box. 

“We have been creative and maybe a bit contrarian, but always disciplined and loyal to the mid-market segment, building deeply entrenched and strong leadership positions across the Nordics where we deploy sector expertise built over our 20 years of being active in the region,” Johansson says.

All of Altor’s investment partners in the Nordics have risen through the ranks from an associate level and, over the years, the firm has begun emphasising a key trait it believes will lead them to success in the world of private equity.

“It’s all about curiosity – you should want and be able to see things that others don’t really care to look for, and that’s how you will create more attractive opportunities,” Johansson elaborates.

Lessons from crises 

As a firm, Altor has sought to stay relevant across various investment cycles. In hindsight, the firm believes that the crises that occurred in each cycle offered them “more pockets of opportunities” to take a step forward. 

Harald Mix, managing partner and co-founder of the firm, observes: “One lesson we have learned from the macro crises of the past 20 years is the need to maintain price discipline. Having negative interest rates is probably not what investment players are going to bank on in the future. One should keep in mind that the multiples you’re looking at today may not necessarily be around in the future.” 

Co-managing partner Paal Weberg agrees. In his opinion, it is very difficult to differentiate oneself in stable times. He elaborates: “While it’s painful to go through these times, doing the right things through the crisis has provided us with a tremendous lift during the GFC, the pandemic and through the Ukraine war. Our portfolio return since the beginning of Covid has been 60-70%.”

It seems that the sponsor’s value creation thesis has the answers. Acting fast on creating degrees of freedom, on costs, and liquidity, and focusing on the core business in turbulent times have stood the firm in good stead. In Weberg’s view, “you will be able to leap ahead when things start to pick off and you have continued to invest”.

Corroborating this opinion, Mix believes that the best deals a firm can actually make are when it’s most difficult to make deals. Usually, the most difficult time is when everything is aligned. When financing and public markets are incredibly hot, it’s really difficult to invest for long-term and attractive returns. A cooling-off period every five to six years is pretty useful to reset, Mix concludes.