The determinants of where Nordic private equity funds are domiciled

Abstract

The objective of this thesis is to analyze the determinants of the choice of where Nordic Private Equity funds are domiciled. I show that there is a strong link between a country’s tax and legal environment and its ability to facilitate for international Private Equity investors. Further, I show that the Nordic countries’ tax and legal environments are misaligned with international private equity investor’s expectations. I introduce a unique data set of 122 Nordic Private Equity funds and distinguish between whether the funds are domiciled within or outside the Nordic countries. I find that there is a significant higher probability of a fund being domiciled in a foreign jurisdiction when the fund has international investors. The results are robust regardless of how foreign investor is defined. To be more precise, as soon as a Nordic Private Equity fund is considering raising capital from non-domestic investors, the fund has a significant higher probability of being domiciled outside the Nordic countries, where the Channel Islands are the preferred jurisdictions.