Polaris is a Nordic mid-market private equity firm that has been operating since the late 1990s. Building on more than two decades of experience in private equity, the firm has extended its approach into listed markets through Polaris Public Equity in 2023. The strategy is led by Roger Hagborg, formerly a portfolio manager at Triton and earlier at Cevian, and supported by a team that includes Oskar Andersson, previously with Fidelity Investments and Bodenholm Capital, alongside Jonathan Stolpe and Carl Brusewitz.

The premise behind Polaris Public Equity is straightforward: the same research-intensive and collaborative approach that has underpinned Polaris’ private equity success can also be applied to public markets. By combining private equity expertise with public market competence, the team seeks to unlock value in Nordic small- and mid-cap companies by taking meaningful ownership stakes, typically in the range of 2 to 10 percent.

“What we saw was a clear opportunity to build an information advantage in listed markets by doing thorough due diligence,” says Carl Brusewitz. In his view, structural changes such as MiFID II have materially reduced sell-side equity research coverage in small- and mid-cap segments, creating fertile ground for fundamental investors with a private equity or activist mindset. “That, combined with the massive inflows into passive strategies, made us see an opportunity for a well-resourced investor to build an information advantage compared to the rest of the market.”

Synergies, and Collaborative Ownership

With Polaris Public Equity, the team led by Roger Hagborg is “targeting the same geography, sectors and market capitalization that the Polaris private equity team has focused on for more than 25 years,” Brusewitz explains. According to Brusewitz, this creates tangible synergies between the two platforms. “There are clear benefits from running both private and public strategies. We share ideas, industry insights, and knowledge about companies and markets,” he explains.

“There are clear benefits from running both private and public strategies. We share ideas, industry insights, and knowledge about companies and markets.”

Rather than adopting the confrontational style often associated with U.S. activist investors, Polaris Public Equity aims to be perceived as an active, engaged, and collaborative owner. “We work closely with management, the board, and, perhaps most importantly, other shareholders to drive change in the company for the benefit of all shareholders,” says Brusewitz.

Before adding a new name to its concentrated portfolio of roughly a dozen holdings, the Polaris Public Equity team devotes substantial time to research and due diligence, applying a distinctly private equity mindset. “We conduct due diligence similar to private equity,” says Brusewitz, noting that the research phase typically spans three to six months. During this period, the team draws on industry specialists from the broader Polaris network to develop a deep understanding of both the business and its market dynamics. “We usually engage with customers, suppliers, former employees, and current and former management and board members,” Brusewitz explains. “By the end of this three- to six-month process, our objective is to have built a clear information advantage relative to the rest of the market.”

Once invested, Polaris Public Equity actively supports portfolio companies in executing value-creation initiatives. The team applies the “Polaris excellence model,” a structured framework for value creation shared across the Polaris investment strategies that includes workshops and hands-on engagement with management and boards. This support can span areas such as procurement, finance, growth initiatives including M&A, and sustainability. “The ambition is to be a strong sparring partner and help these companies develop across multiple dimensions,” Brusewitz explains.

“The ambition is to be a strong sparring partner and help these companies develop across multiple dimensions.”

The strategy typically involves taking ownership stakes of between 2 and 10 percent, often sufficient to secure a seat on the nomination committee or representation on the board. However, the approach is not to arrive unannounced or push for change from the outset. “We usually have multiple meetings with management teams before investing,” says Brusewitz. “In most cases, we invest first and only then engage in discussions around potential initiatives. It’s not about showing up out of the blue with a predefined agenda,” he explains. “The mindset is very much collaborative.”

Strategic Advantage and Long-Term Perspective

The core advantage of the strategy, according to Brusewitz, lies in the private equity framework. “By conducting research together with industry experts from our network, we can identify clear value levers that we believe can materially re-rate a company over a two- to four-year horizon,” says Brusewitz. By entering with that perspective, and with access to the broader resources of the Polaris platform, the Polaris Public Equity team is often welcomed as an owner. “Many of these companies lack both the internal resources and, in some cases, the board-level support needed to drive a meaningful transformation.”

“Cyclical factors largely explain the depth of today’s valuation discount between small caps and large caps.”

Beyond the structural edge provided by its private equity mindset, Brusewitz also points to a cyclical opportunity in Nordic small-cap equities. “Cyclical factors largely explain the depth of today’s valuation discount between small caps and large caps,” he says, attributing this in part to investor flows into perceived safer large-cap stocks during a period of higher interest rates. “Passive and ETF flows have reinforced this trend,” Brusewitz adds. “We expect this to mean-revert over the coming years, potentially supported by, the now lower interest rates, improved risk appetite, and better market liquidity.”

While the cyclical underperformance of small caps may present a timely entry point, Brusewitz stresses that Polaris Public Equity is fundamentally a long-term strategy. “This is an approach that requires time, first to conduct the research, and then to engage with companies and drive transformation,” he concludes. “As a result, investors should typically have a multi-year investment horizon for the strategy.”