EQT AB (publ) Half-year report 2023
Executing on fundraising, investments and performance in a challenging market
“The first half of 2023 has been all about execution. Having completed the combination with BPEA, EQT entered the year focused on maximizing the potential of our global active ownership platform. Whilst we are faced with continued market uncertainties and a slower fundraising market, EQT has seized investment opportunities globally and secured strong client commitments to our latest generation of flagship funds. We have also executed on our long-term ambition to offer strategies for individual investors.”
CEO and Managing Partner
Highlights for the period Jan-Jun 2023 (Jan-Jun 2022)
- Adjusted total revenue amounted to EUR 1,019m (EUR 733m), an increase of 39%. Total revenue (according to IFRS) was EUR 1,006m (EUR 733m). Management fees increased by 63%, which was partly offset by a decrease in carried interest
- Adjusted EBITDA amounted to EUR 555m (EUR 413m), corresponding to a margin of 54% (56%). EBITDA (according to IFRS) was EUR 296m (EUR 332m), corresponding to a margin of 29% (45%)
- Adjusted net income amounted to EUR 450m (EUR 363m). Net income (according to IFRS) was EUR 11m (EUR 234m)
- Adjusted basic earnings per share amounted to EUR 0.379 (EUR 0.366). Adjusted diluted earnings per share amounted to EUR 0.379 (EUR 0.366). Reported basic earnings per share amounted to EUR 0.010 (EUR 0.236). Diluted earnings per share amounted to EUR 0.010 (EUR 0.236)
- Net debt amounted to EUR 1,504m (EUR 57m)
- EQT launched its first semi-liquid strategy, EQT Nexus, providing access for individuals to a diversified portfolio of EQT’s funds
- Work to integrate and optimize synergies with BPEA, including the alignment of investment teams and processes, was substantially completed
- FAUM increased to EUR 126bn (EUR 77bn). Total AUM1 was EUR 224bn
- EQT Exeter Industrial Value Fund VI held its final close at USD 4.9bn of fee-generating commitments, exceeding its target size of USD 4.0bn
- EQT Infrastructure VI, which has a target fund size of EUR 20.0bn, was activated in December 2022. The fund completed its first close, with fee-generating commitments of approximately EUR 11bn to date (July 14). A significant majority of the fund is expected to be raised in 2023, with fundraising set to continue well into 2024. The fund is expected to meet its target fund size
- Fundraising continued for EQT X with fee-generating commitments of more than EUR 18bn to date (July 14). The target fund size is EUR 20.0bn. Fundraising is expected to be materially completed during the summer, with additional time provided for certain commitments, including private wealth platforms. The fund is expected to meet its target fund size
- Fundraising continued for EQT Future, EQT Exeter US Multifamily Value II, EQT Exeter Europe Logistics Core-Plus II and EQT Active Core Infrastructure, with fundraisings generally taking longer in the current fundraising environment
Investment and exit activity2
- Total investments by the EQT funds during the period amounted to EUR 11bn (EUR 5bn), as EQT increased the pace of thematic investments, primarily in Infrastructure
- Signed investments include Radius Global Infrastructure and Tion Renewables (EQT Active Core Infrastructure), LazerLogistics and SK Shieldus (EQT Infrastructure VI), IntegrityNext and GotPhoto (EQT Growth), Dechra Pharmaceuticals (EQT X), IMG Academy and HDFC Credila (BPEA VIII), and Wind Tre (EQT Infrastructure VI)
- Total gross fund exits announced during the period amounted to EUR 4bn (EUR 4bn)
- Signed exits include the full exit of Vistra (BPEA V and BPEA VI) following its merger with Tricor (BPEA VIII), Blume (EQT Infrastructure II and EQT Infrastructure III), VBill (EQT Mid Market Asia III), a partial selldown in Coforge (BPEA VII), a partial selldown in Beijer Ref (EQT IX), the IPO of Kodiak Gas Services (EQT Infrastructure III and EQT Infrastructure IV), kfzteile24 (EQT Mid Market fund), BBS Automation (EQT Mid Market Europe and EQT Mid Market Asia III), and Ellab (EQT Mid Market Europe)
- All key funds continued to perform On plan or Above plan
- Fund valuations were for the most part flat, underpinned by continued underlying operational performance, and fairly stable public market valuation benchmarks
People and future-proofing
- The number of full-time equivalent employees and on-site consultants (FTE+) amounted to 1,814 (1,471), of which 1,716 (1,356) were FTEs. The increase relates primarily to the combination with BPEA in the second half of 2022, whilst EQT maintains a restrictive approach to new hires
- Suzanne Donohoe joined EQT in January as Chief Commercial Officer (“CXO”) to lead a newly-formed platform to drive EQT’s external commercial activities. In addition to Capital Raising & Client Relations, the new platform (“EQT-Ext”) includes EQT’s Sustainability, Business Development, and Communications efforts
- EQT further strengthened its investment organization with senior talent including Francesco Starace, former CEO and General Manager of Enel, joining EQT as a Partner within the EQT Infrastructure Advisory Team, bringing deep experience and expertise in energy and energy transition related industries
- EQT opened an office in Seoul, South Korea, and EQT Infrastructure made its first investment in South Korea with SK Shieldus
- As of the end of the period, 21 portfolio companies had validated their science-based targets, and additionally, 32 had started the process to set their own science-based targets
- EQT published its Net Zero Guidelines and set the target that 100% of the EQT funds’ portfolio investments3 should be on track to deliver on their own net-zero pathways by 2040
- EQT intends to initiate share buyback programs twice a year, corresponding approximately to the expected number of shares to be delivered under its equity- and option incentive programs
- EQT’s Global Capital Markets team has put in place a structure for equity capital market services, similar to its already established practice of providing debt underwriting, in equity and notes offerings related to EQT and its portfolio companies
- The EQT Public Value Fund (PVF, with FAUM of EUR 0.6bn) has decided to transition into a value creation and realization focus, effectively moving into a closed-end structure. This means the fund will discontinue further fundraising and return proceeds to clients as value is realized. There is no limit on PVF’s ability to support with additional capital and no outer time-limit for PVF’s commitment to its portfolio companies.
Events after the reporting period
- Investment levels in EQT key funds as of 14 July 2023, were 20-25% in EQT X, 15-20% in EQT Infrastructure VI and 25-30% in BPEA VIII
1) Total AUM is defined as the sum of fee-generating AUM, value appreciation of investments and fair market value of non-fee-generating co-investments as well as remaining commitments in active funds and committed capital yet to be fee-generating
2) Signed transactions, if not otherwise mentioned
3) Excluding EQT Ventures, EQT Life Sciences and managed accounts
Presentation of EQT AB’s Half-year report 2023
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.
Olof Svensson, Head of Shareholder Relations, +46 72 989 09 15
EQT Shareholder Relations, email@example.com
Rickard Buch, Managing Director, Communications, +46 72 989 09 11
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 07:00 CEST on 14 July 2023.