SWEDEN: An introduction to Private Equity
Introduction
Private equity has grown significantly in Sweden over the past few decades. Today, Sweden is recognised as one of the most developed private equity markets in Europe, and is also one of the largest private equity markets when considering private equity investments relative to GDP. Several global private equity firms (such as CVC, KKR, EQT, Bridgepoint, Nordic Capital and IK) have offices in Sweden, and other global players (such as Bain, Permira and Apollo) cover Sweden from abroad with teams consisting of Nordic investment professionals based in cities like London. Other global private equity firms such as Blackstone, Cinven and PAI are also seen in the Swedish market, in addition to the many mid-market Nordic private equity firms (such as Altor, Axcel, FSN and Summa Equity).
According to a study published by the Swedish central bank (Sveriges Riksbank) in February 2025, private equity firms have since 2010 acquired approximately 3,400 Swedish companies through buyouts, and invested venture or growth capital into almost 10,600 Swedish companies. These companies operate across a wide range of industries, although private equity investments into companies that operate within the technology, telecom, media, finance, insurance, life science and healthcare industries are particularly common. The Swedish central bank estimates that companies that have been subject to buyouts within the past seven years employ more than 350,000 persons, and that those that received venture or growth capital during the same period employ over 222,000 persons.
As a result of the very Seller-friendly market practice in the Nordic region in general and Sweden in particular, many international private equity sponsors prefer to exit their Swedish investments through Nordic-style transaction processes and transfer agreements governed by Swedish law. This preference is also driven by the fact that Sweden is one the most developed W&I insurance markets globally, which facilitates exits with minimum liability tail for the exiting private equity investors.
While 2024 started slowly for Swedish private equity transactions due to the challenging global financial conditions, the number of transactions increased during the second half of 2024 and the first quarter of 2025, with several multi-billion dollar private equity transactions taking place. According to data from Mergermarket, the number of transactions involving a private equity seller and/or buyer increased by approximately 50% during H2 2024 as compared to H1 2024. The increase in private equity-driven transactions is expected to continue during 2025.
The Swedish IPO market has historically been very active - partly driven by the Private Equity industry - with currently above 1,000 listed companies, which is approximately the same number of listed companies in Germany and France. The IPO market did also show recovery during 2024, with the number of listings in Sweden increasing to 14 during 2024 from six during 2023, although this is way below the 100+ listings (on all Swedish stock exchanges) that Sweden experienced in 2021.
New Legislation Affecting Private Equity
A development impacting the Swedish private equity market is the new legislative proposal aimed at the taxation of carried interest. This proposal introduces specific amendments within the existing "3:12 tax regime", with the objective to enhance transparency and predictability in the taxation of carried interest while maintaining and increasing Sweden's attractiveness for private equity investments and investors.
Additionally, investments in Swedish companies have also been impacted by the Swedish Foreign Direct Investment (FDI) Act, which has been in force for a bit more than a year. Under the Swedish FDI regime, the Swedish authority the Inspectorate of Strategic Products (ISP) has the power to block foreign direct investments in Swedish companies that may adversely affect Sweden's security or the public order or public safety in Sweden.
In an international comparison, the scope of the Swedish FDI Act covers an unusually wide range of activities, which includes essential services, security-sensitive activities, critical raw materials, large-scale data processing, dual-use products, military equipment, and emerging technologies. Investors (including Sweden-based investors) must notify transactions which result in the investor becoming the owner of more than 10% of the voting rights in a company which carries out any of these activities. However, the ISP may only block (or conditionally approve) investments by non-EU investors.
During the past year, more than a thousand transactions have been notified to the ISP under the Swedish FDI Act. The Swedish FDI regime builds on swift Phase I approvals (an up to 25 business days process) for non-problematic investments, to avoid a chilling effect on investments in Sweden, and Phase II investigations were launched in 2% of the cases only. In a Phase II process, the ISP has three months to decide if the investment should be approved (with or without conditions) or prohibited. Phase II may under certain circumstances be extended by up to three additional months.
In December 2024, the ISP notified its first prohibition of a transaction under the Swedish FDI Act (an investment in an anode-material production factory by a Chinese investor). Furthermore, during the same month, the ISP issued its first sanction decision, imposing a modest SEK 200,000 fine (which could in theory be as high as SEK 100 million) to a Swedish company for failing to notify an investment that fell within the scope of the Swedish FDI Act to the ISP. The fine has been appealed, but no decision has yet been delivered in the appeal process.