Altor

"It could also be said that Altor, in a short time, took on two collapsed companies in a high-risk industry (Bure sold its share to Altor in May 2012). Historically, profits have fluctuated greatly for investment banks. At times, they have lost almost as much as they earned during the good years."

"IK’s headquarters differ from EQT’s, Nordic’s and Altor’s not only because the interior design and architecture are older and more grandiose, but also because there are more “tombstones” in the meeting rooms than at any of the competitors. These “tombstones,” which is a strange name, are a kind of glass trophy that are made after a deal. They stand as monuments to historical successes. But most of those who made the deals at IK are no longer there. Of those who were present during the early days, in 2013 there was only one person left besides the founder Björn Savén. And Savén has moved back to London."

"Later that spring, Mix heard the rumor that Feder’s counterpart at Harvard would come to Stockholm to meet competitor Nordic Capital. Mix acted lightning fast. He called up and invited Peter Dolan to dinner in one of Operakällaren’s secluded smaller dining rooms upstairs. The dinner went well, and Harvard also chose to invest in Altor’s first fund. In May 2003, in the record time of three months, Mix had gathered the 650 million euros that was the target; in addition to the pension foundations of Harvard and Princeton, he also brought along Yale’s university endowment, a total of about fifty investors. – At IK, we worked a lot with “shotgun wedding” when looking for investors, meaning we marketed ourselves very broadly. When I started Altor, I did the opposite, he says. Altor has stuck to that strategy. It works as long as things go well; you call old investors when setting up a new fund and ask if they want to join, and if they are satisfied, they say yes. Therefore, it is difficult for new investors to get into the best venture capital firms, their funds quickly become “pre-booked”."

"The consistent, high returns that all venture capitalists and investors seek come from companies like Piab. Harald met his peer Jakob Tell at an event for young leaders. Jakob explained that his family had founded the company, which manufactures various types of vacuum pumps for industry, in the 1950s. But now they had decided to sell, as the family could not manage to take the business further on their own. Mix became curious and started digging into the numbers, what did the growth look like in the industry, “that’s crucial.” How competitive was Piab, how profitable? “Our question is always, even if things are going well, can it get even better? We don’t enter companies unless we believe we can double profitability within five years,” says Harald Mix. It ended with Altor buying 75 percent of Piab in 2006, of which a portion was sold to management, and the rest was retained by the Tell family. Between 2006 and 2011, the profit margin (profit as a share of revenue) increased from 10 to 27 percent. Piab is an example of how venture capitalists enter family businesses and raise growth and profitability targets, setting the bar higher than the family has managed to do, because a family that has everything they own in a company does not dare to bet and take risks in the same way."

"If the telecom market became EQT’s and IK’s early hunting grounds after deregulation, then the pharmacy market became Altor’s, even though it did not offer such quick money. In November 2009, Altor bought the largest independent pharmacy group, with 2,000 employees at 200 pharmacies, and named it Apotek Hjärtat. Since then, they have added another seventy or so pharmacies to their group. The market leader is Apoteket AB, which is still state-owned."

"The problems there arose when Altor tried to build a total service model based on a foreign example. Major customers like Telia, who had spun off Relacom a few years prior, resisted. Harald Mix expresses it as “we underestimated our negotiating position vis-à-vis the large customers.” What had the partners lost? Probably not that much. It’s true that they themselves invest 1-2 percent in the funds in which they operate, but even if the fund performs poorly, they still get to keep the annual fee. And if the fund performs well, there will be a profit not only on the capital the partners have invested, but also on the profit-sharing “carried interest” they receive as a reward from the other investors in the fund. Because the annual fee serves as a cushion, the risk is not that high for the partners. They, unlike the investors, get paid no matter what."

"But Harald Mix says that Altor has reduced the risk in Carnegie. He points out that Carnegie has a large operation with fairly low risk; they manage just over 200 billion SEK for clients in their funds. On that money, fees of one to two percent per year are collected. “Wealth management” is what this growing industry of megafunds is called, which is to invest the public’s and companies’ pensions and savings. That is where Mix sees opportunities. — The savings market is growing by six to eight percent per year. But we know that the business is very cyclical. We may keep Carnegie for five or ten years; we’ll see what is required. Revenues fluctuate because stock prices do; in a downturn, revenues from the funds also fall because there is less capital to charge fees on. The acquisition of Carnegie/HQ is atypical for the industry; in general, private equity companies do not buy financial companies. They do not fit at all into the model that prescribes stable income. Many shake their heads at the purchase; others argue that Altor has performed a service to society—they saved a large company that would otherwise have gone under or been broken up."