EQT AB (publ) Q3 Announcement 2022
Future-proofing our global platform
“Economic headwinds and tighter financing markets continue to dampen investment and exit activity, and some portfolio companies are seeing the impact of the deteriorating macro environment. For EQT, the third quarter was characterized by solid fundraising activity across several investment strategies, demonstrating the support we have from clients. With BPEA, we are a stronger, more scaled and diversified leader in active ownership strategies, better able to leverage insights on a global basis to drive differentiated long-term returns.”
CEO and Managing Partner
Highlights for the period Jan-Sep 2022 (Jan-Sep 2021)
- During the quarter, preparations continued for the closing of the combination with BPEA, set to create a scaled and diversified global leader in active ownership strategies
- EQT is evaluating fund structures that would facilitate for private wealth clients to invest in EQT funds
- AUM increased to EUR 92bn (EUR 70bn)
- EQT X had its first close at EUR 15bn and fundraising is expected to be concluded in 2023
- Fundraising was initiated for EQT Infrastructure VI with a target size of EUR 20bn, with the vast majority of the fundraising expected to take place in 2023
- Fundraising was initiated for EQT Exeter EU Industrial Core II, with target fund size of EUR 2.5bn
- EQT Growth had its final close at EUR 2.2bn
- Fundraising continued for EQT Future, EQT Ventures III, EQT Active Core Infrastructure and EQT Exeter US Industrial Value VI
- Total investments by the EQT funds in the quarter amounted to EUR 3bn (EUR 7bn), as market uncertainty and constrained financing markets hampered the investment activity during the period
- Investments during the quarter include United Talent Agency (EQT X), BTRS Holdings Inc (”Billtrust”) (EQT X) and various add-ons by portfolio companies
- EQT X was activated and started charging management fees upon the close of its first investment in July 2022
- Total gross fund exits in the quarter amounted to EUR 2bn (EUR 5bn)
- Signed exits include GPA Global (EQT Mid Market Asia III), close to EUR 2bn of exits in EQT Exeter (various funds) and Risk Methods (EQT Ventures I)
- All Key funds continued to perform On plan or Above plan
- In the EQT Key funds, portfolio companies overall are seeing continued sales and EBITDA growth, contributing positively to fund valuations. Certain realizations were executed above the recent fund valuation level, and FX contributed positively to the EUR denominated valuations in the third quarter. A few portfolio companies have however seen an impact on EBITDA margins as a result of e.g. energy prices, wage growth or Covid-related restrictions earlier in the year, which, together with lower share prices for listed assets, and lower public market references in multiple based valuations, had an negative impact on valuations in the key funds, primarily in Private Capital. As a result, the key fund valuations were largely stable in the third quarter
People and future-proofing
- The number of full-time equivalent employees and on-site consultants (FTE+) increased by 67 during the quarter and amounted to 1,538 (1,089), of which 1,436 (1,016) were FTEs
- EQT has slowed its hiring pace, and is continuously driving digitalization and scalability initiatives
- Caspar Callerström announced that he will step down from his role as deputy CEO and member of the Executive Committee, and will move into internal advisory roles
- In September 2021, the Swedish Financial Supervisory Authority (the “SFSA”) started an inquiry regarding EQT’s handling of information in connection with EQT’s lock-up revision and related share sale by partners of the EQT AB Group. In September 2022, the SFSA closed the inquiry and concluded that EQT managed its disclosure and information correctly and appropriately throughout the revision of the firm’s lock-up structure
Events after the reporting period
- EQT closed the combination with BPEA, creating a scaled and diversified global leader in active ownership strategies
- Investment level in EQT key funds as of 18 October 2022, were 10-15% in EQT X and 75-80% in EQT Infrastructure V
- Exit activity after the period includes a divestment of a minority stake in GlobalConnect (EQT Infrastructure III)
- Announced that EQT Exeter Industrial Core-Plus Fund IV held its final close at USD 3.0bn
Combination with BPEA (Baring Private Equity Asia)
- On 13 September 2022, BPEA fund VIII closed at its hard cap, with USD 11.2bn in total commitments (of which USD 10.5bn in fee-generating commitments), making it one of the largest private equity funds ever raised in Asia
- As of 30 September 2022, BPEA had EUR 22bn of AUM and 225 employees
- As of 30 September 2022, BPEA reported Gross MOIC of 2.4x for BPEA fund VI, 1.8x for BPEA fund VII and 1.1x for BPEA fund VIII. The investment level in BPEA fund VIII was 15-20%
Presentation of EQT AB’s Q3 Announcement 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 register here. You will then receive your personal dial-in details, to be able to ask questions during the Q&A.
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
EQT Shareholder Relations, firstname.lastname@example.org
Rickard Buch, Managing Director, Communications, +46 72 989 09 11
EQT Press Office, email@example.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 07:30 CEST on 18 October 2022.