Six Funds, One Dog, and a DPI Problem
A Nordic buyout fund needs to prove it can still return capital before LPs commit to Fund 6
15/05/26
Erik Solberg started Kvist Capital 25 years ago with a simple thesis: stay small, stay disciplined on price, and own the lower mid-market in Nordic consumer and industrials better than anyone else. Five funds later, the thesis has mostly held. Kvist built a reputation for tenacious, unglamorous dealmaking — never the biggest check in the room, rarely the highest bidder, but consistently the one that closed. Fund sizes crept up slowly and deliberately: €60m, then €95m, then €150m, then €200m, and then €275m for Fund 5, raised 3 years ago. Erik is planning to come back to market for Fund 6 within the next 18 months targeting €300m, a modest step up in keeping with a firm that has never chased scale.
There's a problem sitting in the middle of that plan. Fund 4, raised in 2016, has been a dud. Erik knows it, and so does everyone he's about to ask for money.
Background
| Company | Invested | NAV | Status |
|---|---|---|---|
| Skog & Co | 30 | 62 | Strong |
| Lumen Dairy | 25 | 48 | Strong |
| Arctic Brands | 20 | 30 | Strong |
| Fjord Fittings | 30 | 18 | Underperforming |
| Nordvik Components | 35 | 22 | Underperforming |
| Baltic Fasteners | 28 | 15 | Underperforming |
| Helsing Foods | 29 | 12 | Underperforming |
| Total | 197 | 207 |
Problem
Fund 6 holds 7 portfolio companies: 3 have performed well, 4 haven't.
Against a €200m fund, that's roughly break-even on paper. Only about €62m has actually been distributed back to LPs so far, a DPI of just 0.3x, with 70% still unrealized. A tough macro backdrop, a slow exit market, and the departure of 2 senior team members over the past few years haven't helped either.
Erik starts sounding out Kvist's anchor LPs about Fund 6. It's too early to judge Fund 5, but their message on Fund 4 is loud and clear: DPI before committing to anything new. A couple go further: Erik has generated stellar returns for them over the years and they want to support the firm, but this one's a dog and they'd rather take the loss and move on than wait it out.
Erik brings in Joran Partners to look at what's actually available to him.
Joran rules out Erik's first idea, a GP-led continuation vehicle, early on. That route works best for a handful of crown-jewel assets a GP wants to hold longer, not a mixed bag of small mid-market positions where transaction costs alone could eat into whatever value there is to unlock.
Instead, Joran points to an LP tender: a structured process where LPs are offered the option to sell some or all of their fund interest to a third-party buyer at an agreed price. The fund itself stays exactly as it is, no new vehicle. LPs who want liquidity get it; LPs who'd rather stay invested simply don't tender. Running it with Kvist involved also means buyers get direct access to the GP and portfolio-company detail, rather than working off dated capital account statements. Buyers price with more confidence; LPs get a fairer, more consistent process than negotiating one-off. Joran thinks this is a better fit for a fund this size and this shape.
With Erik's support, Joran presents options and recommendations to Fund 4's LPAC. With the LPAC's blessing, Joran opens dialogue with a few relevant buyers around a Fund 4 LP tender.
Solution
The tender attracts a number of buyers, drawn to the combination of upside in a few quality assets, a GP with a strong track record, and the chance to park meaningful capital in a single deal.
The winning bid comes from a large American secondary buyer, who offers to do the deal at a 32% discount to NAV, provided Kvist's own GP commitment remains in the fund.
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Total | |
|---|---|---|---|---|---|---|
| Input | -140 | -140 | ||||
| Output | 0 | 35 | 60 | 65 | 47 | 207 |
| Net | -140 | 35 | 60 | 65 | 47 | 67 |
| Invested | 140 | |||||
| Returned | 207 | |||||
| MOIC | 1.5x | |||||
| IRR | 17% | |||||
The deal math works out as follows:
To the buyer: €140m paid (32% discount to NAV). Expected MOIC of 1.5x with 17% IRR before accounting for any additional upside.
To the LPs: (€140m returned/200M invested = 0.7x DPI) + 0.3x DPI already paid = 1x DPI
Kvist opens the tender to every LP in Fund 4. Each LP decides independently how much of their position to sell, and most elect to tender in full.
It's not quite the 2-3x Erik had delivered on Kvist's earlier funds, but it gives LPs a way to leave Fund 4 with their money back — a workable outcome given where things stood. Several anchor LPs who'd been non-committal on Fund 6 come back around, reassured less by Fund 4's numbers than by finally having an exit from it.
Kvist's own GP commitment stays in Fund 4 throughout, a clear signal Erik still believes in the recovery.
With the episode behind him, Erik acknowledges that this is a tough business and not every fund can be a home run. Sometimes it's just about living to tell the story another day.
Outcome
Disclaimer: This case study is for illustrative purposes only and does not constitute financial, legal, or tax advice. It is a hypothetical, simplified scenario intended to demonstrate how a secondary market transaction might be structured, and does not represent an actual client, transaction, or investment recommendation. The organizations, individuals, and figures depicted are fictional; any resemblance to real entities or persons is coincidental. Nothing in this case study should be relied upon in making an investment decision.