Building companies well positioned for the future
EQT invests in good companies across the world with a mission to help them develop into great and sustainable companies. By providing access to ownership skills and operational expertise, EQT can help portfolio companies grow and prosper, both under EQT’s ownership and with future owners.
The portfolio companies develop through the implementation of strategies geared towards growth and operational excellence. Sales growth and margin expansion are achieved through multiple strategies, including geographic expansion, new products, acquisitions and strategic re-orientation.
EQT has a track record of consistent and attractive returns across geographies, sectors and strategies. EQT does this by making a real difference: over the past five years, EQT has, on average, grown the portfolio companies per year by: 7 % employee growth, 17 % revenue growth and 18 % EBITDA growth. This reflects average annual development in EQT’s portfolio companies since 2017, including both historical and active funds (excludes EQT Ventures, EQT public Value and EQT Exeter-funds).
The EQT Playbook is a key element of EQT’s active ownership model and includes tools focused on driving growth and developing portfolio companies through digitalization, sustainability and operational excellence. The EQT Playbook is used across EQT’s strategies to future-proof companies and make a positive impact.
1. Thematic and sector-based approach
EQT applies a thematic approach in deal sourcing. Guided by underlying macro trends, EQT targets high-quality companies with significant sustainable growth potential in attractive industries with secular growth drivers and strong downside protection.
The thematic approach is combined with deep sector expertise. EQT sources investment opportunities in market-leading companies with good prospects for future growth and operational improvements within the identified sectors. Investing alongside macro trends with a thematic focus puts EQT in a position where we can be part of the solution to significant challenges of our time and where EQT’s expertise can make a positive impact.
Key themes: Climate & Nature, Health & Wellbeing, Inclusion & Equality, Resilience & Transparency, Our Connected World, The Modularization of technology, Distributed ownership & Decentralization, Urbanization, Aging population
Private Capital: Healthcare, Technology, Services, Industrial Tech
Real Assets: Digital Infrastructure, Energy & Environmental, Social, Transport & Logistics, Life Sciences, Residential & Self Storage
EQT believes that local knowledge, local business relationships, local presence and access to local deal flow are all critical to securing a competitive edge in private markets. This approach has resulted in close, long-term relationships between EQT, private owners and companies. EQT’s geographical presence in Europe, the Americas and APAC allows the investment organization to combine extensive local knowledge and cultural understanding with deep global sector expertise.
3. House of value creation
EQT applies an integrated framework of tools to support value creation and performance in EQT funds’ portfolio companies. The framework includes value creation levers, such as revenue enhancements, management changes, pricing, cost improvements and more transformational levers such as strategic realignment and add-on acquisitions.
Shortly after acquisition, EQT supports the portfolio companies with the development of full potential plans to help them execute on set targets that the portfolio companies will be continuously evaluated against. EQT carries out established periodic performance reviews, which provide an owner’s forum for high-level and forward-looking discussions on value creation
4. Governance model
EQT’s governance model is designed to enable accountability, promote fast decision-making and empower EQT funds’ portfolio companies’ CEOs, while allowing for informal free-thinking.
The model is built upon clear roles and responsibilities for the management of the portfolio company, its board and the EQT AB Group. It is underpinned by a TROIKA forum consisting of the portfolio company’s Chairperson (typically appointed from the EQT Network), a responsible advisory partner at EQT and the portfolio company’s CEO. The TROIKA is a sparring partner to the CEO and keeps EQT well-informed of the performance in the portfolio company. This informal forum also creates a good relationship among the involved parties that helps to drive value creation in an aligned and effective way
5. EQT Network
Since its foundation, EQT has built a global network of advisors with a variety of backgrounds, including entrepreneurs and current or former executives of major international corporations. Many of these relationships have evolved from EQT’s connection to the Wallenberg sphere and its global network that spans across industries and sectors. The advisors in the EQT Network add operational and strategic expertise and experience to the EQT funds’ portfolio companies. The advisors are engaged in the entire investment process from providing strategic advice on initial deal sourcing and assessment of potential investments, to joining the boards of portfolio companies.
Leveraging world-class industrial expertise has always been part of EQT’s DNA and exploiting digital opportunities is critical for future-proofing the EQT funds’ portfolio companies.
EQT aims to support the EQT funds’ portfolio companies in driving digital transformation and developing them into digital leaders in their respective industries. To achieve this, EQT has made significant investments in its own digital teams, infrastructure and capabilities. One of EQT’s prioritized digital missions is to continuously make each EQT fund an ever-smarter buyer, owner and seller.
EQT looks to apply industry-specific and bestin-class digital approaches and tools throughout every stage of an EQT funds’ investment cycle, from the sourcing of deals to the due diligence of potential opportunities and the support in improvement of the portfolio companies. EQT’s Digital Framework provides the Fund Management team with support in value creation and drives cross-portfolio initiatives on topics such as cybersecurity.
Sustainability is at the core of EQT’s distinctive value creation approach, critical for future-proofing EQT funds’ investments as well as staying successful and relevant for investors and society as a whole.
Responsible investment principles and ownership practices are an integral part of each investment and value creation phase. EQT strives to grow sustainable business solutions and instill sustainable practices in all investments, to capture opportunities, limit risks and ultimately accelerate positive impact as an investor and owner. In EQT’s House of Value Creation, sustainability is one of the tools supporting Investment Advisory Teams with the integration of sustainability considerations in their day-to-day work advising portfolio companies, for example on how to accelerate a green transformation.
EQT has a growing, dedicated Sustainability Team working in close liaison with the Investment Advisory Teams, acting as a center of excellence and supporting the implementation of sustainability-related topics across the organization and in dialogue with key external stakeholders.