Swedish scapegoating

Hedge funds have taken a stake in Volvo, and now Sweden is in an uproar over…venture capital?

Last month, the acquisition of five percent of voting rights in Swedish truck maker Volvo by two investment firms sparked the ire of politicos in the nation over the role for private equity in Swedish companies.

At the center of the debate were activist shareholders Cevian Capital – through its Cevian Capital II fund – and Parvus Asset Management. While the two firms have not publicly stated their plans for the Swedish national gem, they are seeking a seat on the company's board of directors and are thought to try their hand at forcing a restructuring of the company's capital structure.

One visible sign of backlash against the deal was the very public warning made by Swedish prime minister Göran Persson, who predicted dire consequences of allowing the activist shareholders to alter Volvo's capital structure. On September 8, Persson made a powerful statement to the Financial Times: ?These venture capitalists will break the national capital structures into pieces.?

A week later, Dow Jones reported that rules on investments for Sweden's national pension funds, or AP funds, were to undergo scrutiny at a meeting between the government and the funds' chairmen last month. The first AP fund is an investor in Cevian Capital II. In the report, Sweden's minister for financial markets Sven-Erik Oesterberg was quoted: ?We're prepared to look over the rules,? adding, ?I believe that the AP funds ought to consider the long-term impact on growth and employment when they manage pension savers' money.?

An interesting point to note is that neither Cevian nor Parvus are venture capital funds. Parvus is a UK hedge fund. Meanwhile, Cevian – previously operating under the name of Amaranth Capital – is a Stockholm-based ?private equity-style? hedge fund (despite recent references to it as a ?buyout? fund in some media reports) that makes direct investments in publicly listed companies.

Perhaps it should not be all that surprising that private equity funds have gotten roped into a debate ignited by hedge funds' recent activities in Sweden, where national elections were scheduled for September 17. After all, private equity funds were under heavy fire last year in Germany, where they were branded ?locusts? by politicians facing an election period. In Japan, buyout funds were denounced in the wake of the Shinsei deal as hagataka, or ?vultures.?

In Germany at least, the furor has died down considerably post-election, as politicians and corporations alike are now signalling to private equity funds that Germany is open for business. The Sweden situation may well play out like that of Germany, with private equity's potential for value creation helping the asset class overcome a temporary scapegoat status.

NVCA backs EntrepreneurshipWeek
The National Venture Capital Association was a supporter of EntrepreneurshipWeek USA, designed to promote entrepreneurship as a career choice among young Americans. As a supporter, the NVCA will plan events during the week of February 24 to March 3, 2007, that will ?inspire, educate and prepare young people, primarily ages 14 to 25, to be among America's next great entrepreneurs and innovators,? according to a press release. The support is part of a broader effort by the NVST to promote entrepreneurship. In April, the association launched MAGNET USA, an initiative to promote math and science scholarship.

GP leaves to become CFO
William Stuart has become the chief financial officer of North Billerica, Massachusetts technology company Avici Systems. Stuart was previously a general partner with Still River Ventures, a Waltham, Massachusetts venture capital firm. The Still River website lists two remaining partners. Prior to joining Still River, Stuart was vice president of business development for ADC Telecommunications and, before that, was CFO of Broadband Access Systems. He received an MBA from Northeastern University. Avici Systems provides routers for the internet.

Helix pro defects to Bridgepoint
John Barber, after 10 years at private equity placement agent Helix Associates, is to join Bridgepoint, a European middle-market buyout firm, in early 2007 as a partner. At Bridgepoint, Barber will lead the London-based firm's investor services team following the retirement of Graham Dewhirst, who has been with Bridgepoint since 1998. He will also serve on Bridgepoint's operating and investment committees. Barber is leaving Helix, where he was managing director, at the end of November and is set to start at Bridgepoint in February. He joined Helix Associates in 1997 and has worked on a number of private equity fundraisings, including Bridgepoint Europe III, which closed on €2.5 billion ($3.2 billion) in May 2005. Helix was acquired by US investment bank Jeffries in May 2005.

Hamilton Lane moves Yett to San Francisco
Private equity advisory firm Hamilton Lane will relocate its San Francisco office to 100 California Street, and will transfer Paul Yett to the new office. He will be joined by Jeff Lumbard, a senior associate with the firm. The firm announced that it will continue to increase its presence in San Francisco and will hire additional professionals in the next several months. Yett has been with Hamilton Lane since 1998, where he has managed the firm's venture capital activities, overseen the management of the firm's global client database, and coordinated new client development efforts.

Credit Suisse expands alternatives platform
Last month Credit Suisse announced that it was pursuing a number of strategic growth initiatives for its alternative investments franchise. The alternative investments division of Credit Suisse currently has more than $125 billion in assets under management. ?We have in recent months embarked on a strategy of further expanding this alternatives franchise by seeking partners with investment expertise in a variety of different asset classes and investment styles in order to expand our product offering,? said Brian Finn, who heads Credit Suisse's Alternative Investments group, in a press statement. Among these initiatives is a partnership with China Renaissance Capital Investment to establish a China venture business, as well as a strategic alliance with professionals in Latin America to pursue private equity investment opportunities in the region.