EQT AB (publ) Q3 announcement 2021
Future-proofing for growth
“EQT continues to leverage its thematic investment approach and we remained active in a strong market during the third quarter, signing several investments and exits. In addition, we continue to implement future-proofing measures in our portfolio companies and, combining this with strong market conditions, valuations are developing well across all key funds.
We are also taking further steps to future-proof EQT AB. During the third quarter, we accelerated investments into our operating platform to manage our rapid growth. We have implemented a revision of the EQT AB Partner share ownership lock-up structure to proactively address a number of challenging issues which we identified. As part of the revision, we have nearly doubled the IPO lock-up duration for EQT AB Partners. While extending lock-ups to fully expire nine years post EQT’s IPO, Partners were also allowed to sell less than half of the shares which would have been released next year. Fifty percent of the net proceeds from this partial share sale will be reinvested into EQT funds. As a result, we secure stronger client alignment and a better ownership framework, together with a more diversified shareholder base and improved share liquidity. In the period post the share placing, liquidity has been elevated at more than twice the year to date daily volumes (Bloomberg).
In terms of EQT’s fundraising efforts, we continue our good momentum. The recent launch of EQT Future represents a new asset class – a longer-hold fund aimed at driving the sustainable transformation of companies. We will apply our proven active ownership model to attain positive impact at scale alongside attractive risk adjusted returns. Soon, we will complement this with a longer-hold fund focused on infrastructure. In parallel, we are preparing for the next generation of funds, starting with EQT X and Ventures III.
Our impact agenda is closely connected to climate change, and I am proud that EQT has become the first private markets firm to set science based targets. We have formalized our greenhouse gas emission reduction targets in line with the 1.5°C pathway described in the Paris Agreement. EQT has a unique position to take an active role in addressing climate change and we are fully committed to combat it holistically across the EQT ecosystem and all portfolio companies. Setting science based targets is an important milestone towards this goal.
We see potential headwinds for the global economy related to factors such as higher energy prices, rising inflation and higher interest rates, as well as strained supply chains. We also experience strong competition for high-quality assets. However, EQT has an attractive investment pipeline covering all strategies and geographies and a solid platform for continued and sustainable growth.”
CEO and Managing Partner
Highlights for the period Jul-Sep 2021 (Jul-Sep 2020)
- EQT became the first private markets firm to set science based targets (”SBTs”), formalizing its greenhouse gas emission reduction targets in line with the 1.5°C pathway described in the Paris Agreement
- Official launch of fundraising for EQT Future - EQT’s impact-driven longer-hold fund
- AUM of EUR 70.3bn as of 30 September 2021
- Fundraising for EQT Infrastructure V is materially concluded and final close is expected in the fourth quarter
- Fundraising continued for EQT Growth and was initiated for EQT Future and EQT Exeter Industrial Core-Plus Fund IV
- Preparations for EQT X, EQT Ventures III and a core infrastructure strategy have been initiated
- Total investments by the EQT funds in the quarter amounted to EUR 7.7bn
- Investments during the quarter include Parexel (EQT IX), Meine Radiologie, Blikk, Cypress Creek Renewables and Covanta Holding Corporation (EQT Infrastructure V) and Storytel (EQT Public Value)
- Investment level in key funds as of 30 September 2021, excluding events after the reporting period:
- EQT IX: 65-70%
- EQT Infrastructure V: 60-65%
- Total gross fund exits in the quarter amounted to EUR 4.9bn
- Exits include Aldevron, Igenomix and Azelis (EQT VIII), Utimaco (EQT MMEU), Zemax (EQT MMUS), Reworks (EQT Ventures) and DELTA Fiber (EQT Infrastructure III)
- EQT VIII Gross MOIC increased from 2.1x to 2.6x during the quarter, following strong value creation and exit events. The expected value creation (Gross MOIC) for EQT VIII is now characterized as “Above plan”
- EQT Infrastructure III and EQT VII continued to develop “Above plan”, and all other key funds in Private Capital and Real Assets remain ”On plan”
- The number of full-time equivalent employees and on-site consultants (FTE+) increased during the quarter by 85 people and amounted to 1,089 (710), of which 1,016 (657) were FTEs
- EQT strengthened its sustainability team with the appointments of Bahare Haghshenas as Head of Sustainable Transformation and Sophie Walker as Head of Sustainability for the EQT Private Capital business segment
- EQT announced the appointments of Tetsuro Onitsuka and Masahiko Kato as Head of Private Equity Advisory Team Japan and Head of Infrastructure Advisory Team Japan, respectively
- To continue to future-proof EQT, investments into the platform are expected to continue during the coming quarters. This includes hiring within Client Relations and Capital Raising Advisory, Tech, Fund Operations and EQT’s investment Advisory Teams
- EQT AB announced that it has prolonged the EQT AB Partners’ IPO share lock-up period, alongside a partial lock-up release, nearly doubling the lock-up duration, with extension to 2026, and to 2028 for the most senior EQT AB Partners. The EQT AB Partners committed to re-invest 50% of net proceeds from the lock-up release in EQT funds
- The Swedish Financial Supervisory Authority opened an inquiry into EQT AB which relates to the handling of information in connection with the lock-up revision, and more specifically, the timing of the announcement
Highlights during the last twelve months (Compared to twelve months ending September 2020)
- Total fund investments of EUR 19.6bn (EUR 8.7bn)
- Total gross fund exits of EUR 16.0bn (EUR 4.2bn)
- AUM of EUR 70.3bn as of 30 September 2021 (EUR 46.5bn)
Events after the reporting period
- Investment level in key funds as of 20 October 2021, were 65-70% in EQT IX and 60-65% in EQT Infrastructure V
- Exits after the reporting period include the sale of Adamo (EQT MMEU) and VFS Global (EQT VII)
Presentation of EQT AB’s Q3 announcement 2021
Financial analysts and media are invited to participate in a conference call, including a presentation at 08:30 CEST.
The presentation and a link to follow the webcast and conference call live can be found here and a recording will be available afterwards.
To participate by phone, please use the following dial-in details below, at least 10 minutes in advance.
Sweden: +46 856 642 651
UK: +44 3333000804
USA: +1 6319131422
Confirmation Code: 27163259
Information on EQT AB’s financial reporting
The EQT AB Group has a long-term business model founded on a promise to its fund investors to invest capital, drive value creation and create consistent attractive returns over a 5 to 10-year horizon. The Group’s financial model is primarily affected by the size of its fee-generating assets under management, the performance of the EQT funds and its ability to recruit and retain top talent.
The Group operates in a market driven by long-term trends and thus believes quarterly financial statements are less relevant for investors. However, in order to provide the market with relevant and suitable information about the Group's development, EQT publishes quarterly announcements with key operating numbers that are relevant for the business performance (taking Nasdaq's guidance note for preparing interim management statements into consideration). In addition, a half-year report and a year-end report including financial statements and further information relevant for investors is published. Finally, EQT also publishes an annual report including sustainability reporting.
Kim Henriksson, CFO, +46 8 506 55 300
Olof Svensson, Head of Shareholder Relations, +46 72 989 09 15
Nina Nornholm, Head of Communications, +46 70 855 03 56
EQT Shareholder Relations, email@example.com
EQT Press Office, firstname.lastname@example.org, +46 8 506 55 334
This is information that EQT AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 07:30 CEST on 20 October 2021.