Nordic Capital Evolution: Milestones in the mid-market

Since successfully closing in only three months, Nordic Capital Evolution has made eight platform investments. Here, Joakim Lundvall and David Samuelson at Nordic Capital Advisors discuss the investments, recent progress and the vital sustainability agenda.

Two years have passed since the first and final close of the mid-market fund Nordic Capital Evolution at EUR 1.2 billion, raised in only three months and substantially oversubscribed at its hard cap.

The Evolution strategy builds on Nordic Capital's long investment experience. It applies its value creation model to a broader size range of companies in selected sectors and regions, leveraging its expertise and extensive networks to accelerate sustainable growth and international expansion.

Sector specialism and institutional resources

"Nordic Capital has grown successfully and become more sector specialist, meaning it made sense to launch an additional strategy. It's a continuation of the main strategy as it leverages institutional resources and expertise but still allows for a bit more of an agile approach," said David Samuelson, Managing Director and part of the Nordic Capital Evolution advisory team.

"It closely replicates Nordic Capital's established strategy focusing on non-cyclical growth and captures investment opportunities at earlier stages within selected sectors and regions," said Joakim Lundvall, Head of Nordic Capital Evolution.

Since its launch, a great deal has happened economically, politically, and socially. However, according to Joakim and David, these changing dynamics have rather strengthened their belief in Evolution's scope.

"Nordic Capital Evolution aligns with ongoing market trends of increased specialism and the need for deep-sector knowledge. There's also a strong preference among investors for the mid-market, particularly in Europe. Evolution has invested where it sought to invest – where it has operational advantages, deep expertise, and experience from similar growth journeys," said Joakim.

"In the face of changing dynamics and an increasingly uncertain macroeconomic environment, we're committed to the strategy and pleased about the recent progress made by Evolution and its portfolio companies," David said.

Notable portfolio achievements

With Boost AI, a global leader in conversational AI for Fortune 1000 companies, Nordic Capital Evolution made its first investment. Since then, seven more acquisitions have been completed.

Joakim and David explain that with Nordic Capital's already strong footprint and local expertise in the region, Evolution was ready from the start.

"They're all different but have common attributes, not least the potential and eagerness to grow and expand internationally. It's a great mix of exciting investments. It's still early days, but we're already seeing interesting steps being taken," said Joakim.

For Qred, this includes being named on the Financial Times' list of the 1000 fastest-growing companies in Europe in 2023 for the fourth consecutive year, a feat no other Swedish-founded company has achieved. The Company also activated its license to become Europe's newest bank in October 2023.

The UK fertility clinic group Care Fertility also recently announced that it is expanding its footprint into the US and Spain. During 2023, the company made transformative acquisitions of established partners Reach Fertility and IVF-Life.

Transformative sustainable growth

Sustainability has long been integral to Nordic Capital’s business strategy, and a notable emphasis was put on ESG at the launch of Evolution. This focus on a few thematic value drivers has been reflected in recent investments, said Joakim.

"One of the most common features of all the Evolution investments is a strong ESG agenda. It was always intended that Evolution would build on Nordic Capital's sustainability focus and commitment to making a positive contribution to society by helping to build strong, sustainable companies.  Autocirc and Hjo Installation are great examples. They're both leading their respective industry’s sustainable transformation, meeting customers’ increasing sustainability demands," he said.

• Autocirc is a leader in the automotive aftermarket with a circular business model built on a closed-loop eco-system for reused and recycled automotive original spare parts. The Company aims to strengthen further its circular offering with a mission to reduce CO2 emissions significantly and its climate impact in the automotive aftermarket industry.

"For us, ESG is as much about reducing emissions as it's about contributing to creating a more inclusive and democratic society," David added.

Qred is committed to creating a more responsible and inclusive lending environment for entrepreneurs and small business owners that have been underbanked. Its mission is rooted in a few disturbing figures.

For example, despite accounting for about 99% of all businesses and generating about 36% of all taxes in the EU, the share of loans to SMEs is less than 1% of Swedish banks' total lending.

Since its foundation, Qred is proud to have helped create 30,000 new jobs and provided 100,000+ loans to underbanked customers, many of them first- and second-generation immigrants.