Industrial Development & Investment AB (IDI), a private equity fund backed and advised by some of Scandinavia’s most prominent industrialists, in early August completed its fourth deal since beginning operations at the start of this year.
IDI was set up last year by chairman Christian Zetterberg, former Volvo president and CEO, Jan Persson, a consultant and former CEO of Indevo, and Dr Ulf Hglund, a management consultant and corporate advisor. The three founders saw an opportunity for a fund that would offer both capital and industrial expertise to industrial and service companies operating in mature industry sectors. Other industrialists were also convinced that a fund with this strategy could build significant shareholder value and literally “came on board” as members of IDI’s advisory board and investors in the fund. In addition to the founders, IDI’s advisory board comprises Gustaf Douglas, chairman of Investment AB Latour, SNS Frtroenderd and AB Fagerhult; Sren Gyll, another former Volvo president and CEO; Berthold Lindqvist, CEO of the Gambro group; Fredrik Lundberg, chairman of MoDo; Goran Lundberg, former vice-president of Asea Brown Boveri; and Melker Schrling, chairman of Skanska and Securitas. A number of other prominent industrial figures are also advisors to, and investors in, IDI.
IDI raised a total of SKr 1.02 billion (ecu 113 million) from its advisors, who together contributed 20% of this total, and Scandinavian institutions. Major participants in the fund include the Fourth and Sixth Fund Boards of Sweden’s National Pension Insurance Fund, Trygg Hansa and Lnsfrskringsbolagen, each of which invested some SKr 100 million. Other investors include KF Invest, LRF, Pensions Varma Oy, Hartog, The Swedish Metal Workers Union, Haakon Group, Norsk Hydros Pensjonskasse, Sanden, the Swedish Construction Workers Union, Joy Equity, the Beijers Foundations, Alma Nova Industri and Anders Wall Foundation.
Carl Palmstierna, a former partner of Goldman, Sachs & Co., was appointed chief executive of IDI; a substantial level of personal investment on the part of the fund’s industrial advisors was a criterion for his acceptance of the post.
Based in Stockholm, IDI has an investment remit covering all the Scandinavian markets plus Germany. Industries undergoing restructuring or where opportunities for consolidation exist are areas of particular interest for IDI, which focuses mainly on later-stage investment opportunities in mature industrial and service sectors.
As IDI’s investment philosophy hinges on active ownership, the fund takes majority holdings only in these transactions. Despite a strong bias towards later-stage transactions, IDI is not precluded from investment in earlier-stage growth opportunities: a maximum of 15% of the fund may be invested in younger companies with high growth potential, such as SQS Security Systems, which was the fund’s inaugural investment. Despite IDI’s regional investment remit, the recent $14 million (ecu 12.6 million) acquisition of Norac Holdings and VBK Transport interiors from Stormbull of Norway was the Stockholm-based fund’s first cross-border transaction. Its three earlier investments were all in Swedish companies.
Reflecting its mainly later-stage concentration and an expected holding period for investments of three to five years, IDI is structured as a seven-year-life fund. It has rapidly established a strong position in the Swedish mid-market and is consequently enjoying strong deal flow, with ten potential transactions currently under review.