Last week Baxter International, the Deerfield, Illinois
healthcare company, announced it would buy Gambro AB, the
privately held Swedish dialysis product maker for about $4
For Gambro, which is owned by Sweden-based private equity
funds Investor AB and EQT, the opportunity to join Baxter and
form the worlds second-largest dialysis company was too
good to pass. Growth at Gambro in recent years has slowed down
due to price competition and a slumping European economy. For
Baxter, which in 2011 had revenue of nearly $14 billion and a
pile of cash overseas, it was a strategic opportunity to deploy
the capital. But for EQT and Investor AB, the two private
equity funds that own Gambro, it was another highly profitable
deal that the Swedish dealmakers helped engineer.
In an environment in which dealmakers that also are
long-term global investors are in short supply, Swedish private
equity funds find themselves in great demand. Weve
always been investors for the long term, avoiding the cyclicals
and focusing on telecommunications, transformational IT and
healthcare, says Thomas von Koch, a founding partner of
EQT, which manages more than $18 billion in assets.
Although Swedens involvement in global M&As and
private equity pales next to the U.S. and even the U.K., its
importance within Europe has grown significantly
especially as most of its neighbors face economic uncertainty
and forecasts of slow growth ahead. In 2011, the flow of
investment funds into Sweden amounted to $5.6 billion or 14.1
percent of the total funds flowing into Europe, according to
data compiled by EVCA, the Brussels-based trade group
representing European private equity and venture capital. Just
five years ago in 2007, the $4.6 billion of funds that went
into Sweden accounted for only 5.7 percent of the total.
The flow of capital into 368 Swedish companies in 2011 rose
to $8.7 billion or 7.4 percent of the total invested in
European companies. In 2007, the flow of private equity into
478 Swedish companies was $2.1 billion, less than 1 percent of
the total into European companies.
At a time when the euro zone is near collapse, beset by
unstable currencies, conflicting laws and regulations, and
unpredictable markets, Sweden in spite of its size and
geographical location has emerged as one of the
continents safe havens.
Sweden has created a pro-business economic climate that both
domestic and foreign businesses feel comfortable about, says
Johan Ohman, political adviser at the Ministry of Enterprise.
We have a good and robust framework for public finances,
low inflation, low interest rates and no tendency towards
deficit spending, says Ohman. Moreover, the
countrys problems with competitiveness during the 1980s
and the fact that Sweden is such an export-dependent nation (50
percent of GDP) has created an environment of stability and
predictability for investments and business in Sweden.
Sweden is one of a handful of European countries with a
triple-A rating from Moodys. And although it too sees
slower growth ahead, its projected GDP growth rate of 2.7
percent is far ahead of most developed countries, including the
Our role in the markets has been defined by our
international experience, says Rolf Rising, head of
business development for Invest Sweden in Stockholm. And
although the overall European economy is in a decline, Sweden
is in good shape, he explains.
Sweden, where Skype and, more recently, Spotify have been
launched, is known for its digital-media innovation. But its
healthcare industry has been one of the driving forces behind
the recent dealmaking activity. Earlier in the year,
diagnostics company Phadia was acquired by Thermo Fisher
Scientific for $3.5 billion. Swedish medical technology
provider Getinge, founded in 1904, acquired Atrium Medical, for
$680 million. And EQT, which in 2007 purchased Denmarks
Dako, a leading company in tissue-based cancer therapeutics,
sold it to Agilent Technologies for $2.2 billion.
The once strong presence of Astra Zeneca and
Pharmacia, two of the worlds largest pharmaceutical
companies; a renowned research institution such as Karolinska;
and a remarkable history of collaboration between public and
private institutions has made Sweden a central platform in
healthcare, says Barbro Ehnbom, founder and chairman of
Swedish-American Life Science Summit (SALSS), an annual
gathering in Stockholm of life science companies and
At SALSS, Michael Treschow, chairman of the board at
Unilever, underscored the vital role of Sweden as an
increasingly important intellectual hub for R&D. What made
the country so vital was the cooperation between the business
community, the government, universities, investors and NGOs.
The pioneering role of Sweden could very well help shape
similar developments in the developed markets as well as
emerging and frontier markets, said Treschow.
In the 1990s Sweden had one of the worst financial crises of
modern times. The deregulation of the credit markets in the
1980s created overexpansion and bubbles in real estate and
finance. And by the early 1990s Swedens currency had
crumbled, with interest rates soaring to 500 percent overnight.
Real estate prices dropped 50 to 60 percent. Nearly twenty
years later, Sweden stands atop a crumbling European economy,
as one of the preferred centers of dealmaking and investment
capital, second only to Germany.
Sweden has put its economic crisis behind it,
says Leksell. The country has rebuilt its infrastructure,
reshaped its healthcare system; and with very tight controls on
government finances and no deficit spending, it is one of the
healthiest countries around, he adds.