Despite the majority of European capital being concentrated in Western Europe-based managers, those based in the Nordics have offered the best returns for investors on the continent.

The information comes from alternative asset class information provider Preqin, which has a tool that tracks over 1500 Europe-based unlisted private capital vehicles of vintages between 2006 and 2018. The data shows that although the risk is marginally higher in the Nordics than elsewhere, investors are getting well compensated for it.

Preqin’s data shows that Nordic-based managers achieved a median internal rate of return (IRR) of 14.3 percent, with an average standard deviation of 12.1 percent. By comparison, managers based in Central and Eastern Europe produced the lowest median return of 8.2 percent although this came at the lowest risk, with standard deviation being 8.7 percent.

The firm said institutional investors need to be fully aware of the risk and reward profiles when committing capital to managers. The data suggests that this class of investor is willing to take on slightly higher risk as Nordic-based managers have gained four times more private capital than their Central and Eastern European counterparts.

The attraction of the region is also reflected in fundraising statistics as the largest Europe-based fund closed since 2018 was managed by Swedish-based EQT.

Preqin stated: “As Nordic managers continue to provide investors with outsized returns, we expect fundraising and AUM in the region to continue increasing.”