Private equity in Norway: Impact and determinants of private equity

Stian Sandvik

Student thesis: Master thesis


This paper aims at overcoming some of the shortcomings of previous research on private equity investment in Norway. In particular, it examines the Norwegian private equity market and attempts to identify the characteristics that determine the flow of domestic and foreign capital. Further it examines the potential impact of domestic and foreign private equity ownership on portfolio firms operating in a premature private equity market. Private equity is a relatively new phenomenon in Norway. The alternative asset class is gaining grounds in the Norwegian market and the national industry is experiencing exponential growth in fund-raising activities and investments. Currently, the Norwegian market is largely concentrated in terms of domestic investment activities and a low representation of foreign investors. Foreign investment activity is expected to increase in the coming years, and as of this the thesis aims to shed light on the effect of private equity ownership. First, a descriptive analysis outlines and discusses the main characteristics of the Norwegian private equity market and compares with other Nordic markets. The identified characteristics provide suggestions as to why the Norwegian market is relatively underdeveloped. Second, an extensive literature review discusses empirical findings on the financial returns of PE ownership. The underlying drivers and mechanisms that influence abnormal operating performance are identified and compared across several empirical studies. Third, a quantitative study incorporates a sample of 16 buyout transactions and analyzes the operating performance of portfolio firms where new owners are private equity firms. Additionally, it analyzes and compares the operating performance of portfolio firms under domestic and foreign private equity ownership. Lastly, the results of the analysis are summarized and discussed. The thesis concludes by suggesting areas for future research.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2008
Number of pages85