Private Equity Home Bias in the Nordics

Abstract

Our study analyzes the home bias in private equity deals conducted in the Nordics. We find that Nordic private equity companies outperform their non-Nordic peers when investing in the Nordics by delivering a 17% higher IRR which is both statistically and economically significant. Nordic Private equity firms fit the profile of more profitable PE companies. They are significantly smaller, exit deals faster, have more women on the board, are more often niche players, and have closer office proximity to their portfolio companies. These factors contribute to a higher achieved IRR by Nordic private equity companies. Knowing the existence of the private equity home bias can help private equity companies significantly in how they approach fundraising, expand into new geographies, and manage existing portfolio companies.