Proventus Capital Partners update
September 5, 2011
As a consequence of the turbulent macro environment in the EU and the US caused by decades of public over spending, we are experiencing an increasing need for corporate debt financing sources outside of the banking system. The current situation is in clear contrast to the end of 2010 and the first six months of 2011, where banks where yet again more aggressive with providing higher leverage and also underwriting bridges to high yield bonds etc. Apart from a need to finance acquisitions and expansion, corporates still have large amounts of debt that need to be refinanced during 2012-2014. In the current environment with reduced appetite from the bank sector in anticipation of increasing regulatory demands and wary corporate bond markets, this will clearly be a challenge.
The High Yield bond market has also experienced rapid changes. After a first half of 2011 with large inflows of capital and high risk appetite, the second half of the year has started with dramatically increased volatility and lower general risk appetite, which has lead to a long overdue correction.
During the past two years, we have built a strong position in the Nordics as a partner to both shareholders and senior lenders in a variety of situations. Beginning in June 2011, Proventus is now actively investing the funds of Proventus Capital Partners II, where Proventus, the Fourth Swedish National Pension Fund (AP4), Swedish insurance company Folksam and an additional 20 investors, including a number of institutions as well as qualified individuals, have committed SEK 5.3 billion (approximately EUR 590 million). Over the past months, we have invested with Altor in Orchid, a leading contract manufacturer of medical implants in the US as well as provided capital for expansion to NSP, a Swedish fast food restaurant operator.