EQT AB Group

EQT AB (publ) Half-year Report 2022

Resilient in a more challenging market

“The war in Ukraine has accelerated the slow down in the global economy and introduced new challenges and risks. Public markets have seen a sell off, the financing markets are more restrictive, and as a result, activity levels in private markets have slowed down. EQT is continuing to prepare portfolio companies for a downturn, while actively evaluating new investment opportunities. Our undivided attention is on generating continued resilient returns for our clients across cycles through our thematic investment strategy.”

Christian Sinding,
CEO and Managing Partner

Highlights for the period Jan-Jun 2022 (Jan-Jun 2021)

Financial

  • Adjusted total revenue amounted to EUR 733m (EUR 711m). Total revenue (according to IFRS) was EUR 733m (EUR 709m). In H1 2022, Exeter contributed six months of revenues vs. three months in H1 2021, which was partly offset by lower carried interest in H1 2022, while H1 2021 included retroactive management fees related to 2020
  • Adjusted EBITDA amounted to EUR 413m (EUR 492m), corresponding to a margin of 56% (69%). EBITDA was EUR 332m (EUR 437m), corresponding to a margin of 45% (62%)
  • Adjusted net income amounted to EUR 363m (EUR 433m). Net income (according to IFRS) was EUR 234m (EUR 361m)
  • Reported basic earnings per share amounted to EUR 0.236 (EUR 0.372). Diluted earnings per share amounted to EUR 0.236 (EUR 0.372)
  • Net debt amounted to EUR 57m (EUR 113m)

Strategic

  • EQT announced the combination with Baring Private Equity Asia (BPEA), creating a scaled platform in Asia. As of 30 June 2022, BPEA had EUR 20bn in AUM and 248 FTE+. The transaction is expected to close in Q4 2022
  • EQT launched EQT Active Core Infrastructure - a longer-hold fund targeting core infrastructure companies providing essential services to society
  • EQT completed the acquisitions of Life Sciences Partners (LSP), a leading European life sciences venture capital firm, Bear Logi, a value-add logistics team focused on the Japanese and Korean market, and Redwood Capital Group (RCG), a US-based residential value-add and core plus investment manager
  • EQT priced a total of EUR 1.5bn of sustainability-linked bonds to fund, together with the issue of ordinary shares, the BPEA consideration

Fundraising

  • Assets under management (AUM) increased to EUR 77bn (EUR 71bn), of which EUR 2bn relates to LSP’s AUM per 30 June 2022
  • Fundraising was initiated for EQT X, EQT Ventures III, EQT Active Core Infrastructure and EQT Exeter US Industrial Value VI
  • Fundraising continued for EQT Growth, EQT Future and various funds within the business line EQT Exeter, including EQT Exeter US Industrial Core-Plus IV
  • EQT set the target fund size and the hard cap for EQT X at EUR 20.0bn and EUR 21.5bn, respectively. As of 30 June 2022, EQT X had closed out commitments of EUR 10bn which are not included in AUM

Investment and exit activity1

  • Total announced investments by the EQT funds amounted to EUR 5bn (EUR 7bn), including the acquisitions of Envirotainer (EQT X), SPT Labtech (EQT IX), InstaVolt and Stockland Retirement Living (EQT Infrastructure V)
  • EQT X is expected to be activated and start charging management fees in Q3, upon closing of its first investment
  • Total gross fund exits announced in the period amounted to EUR 4bn (EUR 10bn), and includes the exits of IFS and WorkWave, and Facile.it (EQT VIII)

1) Includes both closed and signed transactions, if not otherwise mentioned

Investment performance

  • All key funds continued to perform On plan or Above plan
  • During the first half of the year, fund valuations were generally supported by strong operational performance among portfolio companies, and certain exits at valuations above fund valuations, offset by lower public market valuation references
  • In Private Capital, EQT VII was marked 0.1x lower at 2.7x Gross MOIC, and EQT VIII was marked 0.2x lower at 2.4x Gross MOIC during H1 2022 whereas EQT IX was flat at 1.4x Gross MOIC
  • In Real Assets, EQT Infrastructure II was marked 0.1x lower at 2.1x Gross MOIC, EQT Infrastructure IV was marked 0.1x higher at 1.5x Gross MOIC, and EQT Infrastructure V was marked 0.1x higher at 1.1x Gross MOIC during H1 2022 whereas EQT Infrastructure III was flat at 2.7x Gross MOIC

People and future-proofing

  • The number of full-time equivalent employees and on-site consultants (FTE+) increased and amounted to 1,471 (1,004) at the end of the period, of which 1,356 (938) were FTEs. LSP, Bear Logi and RCG accounted for approximately 100 FTE+ as of 30 June 2022
  • Brooks Entwistle was elected as a new Board member of EQT AB, subject to regulatory approvals, while Edith Cooper left the Board
  • EQT AB established a Sustainability Committee, marking the first Board-level commitment to sustainability in the private markets industry
  • Christina Drews joined EQT and the Executive Committee as Chief Operating Officer (COO), bringing with her nearly 30 years of experience in the financial industry
  • EQT promoted Masoud Homayoun to Head of Value-Add Infrastructure Advisory Team, effective upon the end of the commitment period of EQT Infrastructure V. Lennart Blecher will continue to be Head of Real Assets Advisory Team and a member of EQT’s Executive Committee
  • Alexandra Lutz assumed responsibility for Motherbrain, EQT’s own AI-driven investment platform
  • Two of the EQT funds’ portfolio companies, Melita and AFRY, set validated science-based targets (SBTs)

Events after the reporting period

  • Investment level in key funds as of 14 July 2022 were 0-5% in EQT X based on target fund size, 85-90% in EQT IX, and 70-75% in EQT Infrastructure V
  • EQT X closed out commitments representing about two thirds of the fund size and active fundraising is expected to be materially concluded in 2022, with final close expected in 2023

Presentation of EQT AB’s Half-year Report 2022

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: +46 850 510 030
UK: +44 1212818004

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.

Contact

Kim Henriksson, CFO, +46 8 506 55 300
Olof Svensson, Head of Shareholder Relations, +46 72 989 09 15
EQT Shareholder Relations, shareholderrelations@eqtpartners.com
Rickard Buch, Managing Director, Communications, +46 72 989 09 11
EQT Press Office, press@eqtpartners.com, +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 07:00 CEST on 14 July 2022.

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